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Negotiating with Centers for Medicare and Medicaid Services

A Negotiation Scenario Planning Framework

In September, the first 10 products were identified for negotiation with Centers for Medicare and Medicaid Services. Brands and therapeutic areas of interest include:

  • Eliquis - Cardiovascular
  • Enbrel - Inflammation
  • Entresto - Cardiovascular
  • Farxiga - Diabetes
  • Fiasp - Diabetes
  • Imbruvica - Oncology
  • Januvia - Diabetes
  • Jardiance - Diabetes
  • Stelara - Inflammation
  • Xarelto - Cardiology

Some pharmaceutical companies are waiting to see how the litigation plays out, while others are preparing to negotiate based on assumptions about the final process.

What's different about these impending negotiations is a small set of critical decisions that will effectively set the stage for negotiation. Critical negotiation decisions include the following:

  • CMS has requested proprietary data that is not typically provided and has laid out a very rigid negotiation process.
  • Sharing data about development, manufacturing, and other costs will set a powerful precedent for future negotiations…and CMS expectations will be set by the approach others take.
  • Determining whether to include data from all R&D to demonstrate how one commercialized compound funds the exploration of many, is one example of the possible framing decisions.
  • A new process that is under legal consideration introduces a high level of uncertainty.
  • Scoping and understanding the zone of possible agreement, including mapping viable alternatives on both sides, will enable negotiation strategy optimization.

The CMS negotiation requires careful preparation and a holistic view of the negotiation process, with: 

  • Cross-functional engagement in modeling and framing data in service of your strategy.
  • Full activation of a broad stakeholder network.
  • A clear picture of the likely CMS position and your own priorities, including the negotiation goal.
  • A principled approach at the negotiation table.

Any number of outcomes are possible, and planning for a set of the most likely scenarios will allow companies to identify accompanying strategies and tactics – and be prepared to act up against a potentially tight timeline. To learn more about how Vantage tools' expertise supported the strategy development, pressure-testing, and refinement of the approach prior to negotiations, check out the CMS negotiation preparation framework below. 

See the Framework