Identifying therapeutic alternatives in Medicare drug price negotiation: The case of etanercept.

As the Centers for Medicare & Medicaid Services (CMS) navigates the process of negotiating drug prices, it plans to compare the cost, safety, and effectiveness of each drug with its therapeutic alternatives. How CMS selects therapeutic alternatives is a consequential decision, and there remains uncertainty about their methodology. To understand the challenges CMS will face in selecting therapeutic alternatives, we developed a methodology that leverages clinical guidelines by US medical professional associations to identify potential therapeutic alternatives for etanercept, one of the first 10 drugs selected for Medicare price negotiation. For each of etanercept's 5 US Food and Drug Administration-approved indications, we identified all drugs with the same mechanism of action as etanercept and considered drugs with different mechanisms if they were recommended in place of etanercept at the same treatment stage, or if there was no strong comparative safety or effectiveness evidence that the drug differed from etanercept. We identified 22 potential therapeutic alternatives to etanercept, including 4 drugs with the same mechanism, 10 biologics with different mechanisms, and 8 small-molecule drugs. We faced several challenges in selecting therapeutic alternatives using clinical guidelines, such as how to reconcile strong recommendations that were based on weak evidence and how to consider combination therapies. This exercise demonstrates the complex considerations that CMS will face as it negotiates drug prices based on therapies' cost, safety, and effectiveness relative to therapeutic alternatives.