What We Told CMS About Downstream Evidence in Medicare Drug Price Negotiation

What Did We Submit, and Why Now?

The Medicare Drug Price Negotiation Program is now producing maximum fair prices, and the proposed rule for initial price applicability year 2029 sets out how CMS will run the next cycles. One provision, proposed 42 C.F.R. § 429.510(e)(1)(iii), expressly allows CMS to consider Medicare claims and other datasets, potentially including evidence about healthcare resource utilization and usage patterns, when it evaluates a selected drug against its therapeutic alternatives. What the proposed rule does not yet explain is how that evidence will be assessed across studies or integrated into the overall negotiation judgment.

That gap is the subject of the two comments we filed in Docket CMS-2026-2080. It continues the approach we took with most-favored-nation drug pricing and the TrumpRx announcement: engage the policy while the decisions are still being made—this time, formally, in the rulemaking record.

Why Does Downstream Evidence Matter in Negotiation?

Drug spending alone does not capture the full effect of treatment on Medicare-covered care. Relative to a therapeutic alternative, a selected drug may change hospitalizations, emergency department visits, physician services, monitoring, complications, or survival, with corresponding effects on total covered spending and on the shares borne by Medicare, plans, and beneficiaries. The relevant question is not whether prescription drugs generally produce "cost offsets." It is whether credible evidence identifies a material downstream effect for the specific drug, comparator, Medicare population, and time horizon at issue.

This is territory we know from the research side. Our published work includes the 2011 Health Affairs study of medication adherence and medical spending, the 2015 Health Affairs analysis of medical cost offsets from prescription drug use in Medicaid, and the 2018 Medical Care analysis of adherence and healthcare utilization—the literature CMS will inevitably confront when respondents submit utilization evidence. That experience cuts both ways: it shows these effects can be real and material, and it shows how easily poorly identified studies can overstate them.

Our Three Recommendations to CMS

The principal comment offers three recommendations:

1. Finalize proposed § 429.510(e)(1)(iii), including its express recognition that Medicare claims and other datasets may contain relevant evidence concerning healthcare resource utilization and usage patterns of the selected drug and its therapeutic alternatives.
2. Use a transparent two-stage qualitative framework that first assesses the credibility and relevance of each study, then synthesizes the body of evidence across comparative direction, economic materiality, certainty, and Medicare applicability.
3. Disclose how downstream evidence informed the assessment: in the concise justification and, subject to confidentiality requirements, in the published maximum fair price explanation.

Just as important is what the recommendations do not do. They create no formula, no separate statutory factor, no presumption that drug treatment produces savings, and no request to translate an expenditure estimate into a particular price change. They preserve the qualitative discretion CMS has proposed, while asking the agency to show its work.

How Would the Two-Stage Framework Work?

Stage 1 asks whether an individual study credibly addresses the negotiation question, using eight common review domains: study design and causal identification (confounding by indication, healthy-adherer effects, immortal-time bias, and their kin), population and Medicare applicability, and related principles. These are review considerations, not pass-fail thresholds; no single design label determines the result.

Stage 2 synthesizes the credible evidence rather than counting studies or averaging estimates: what comparative direction does the body of evidence support, is the effect economically material, how certain is it, and how directly does it apply to the Medicare population at issue? The point of the structure is discipline in both directions—it screens out overextended claims without categorically ignoring the expenditure consequences of clinical outcomes CMS already considers.

The Companion Comment: Making Evidence Submission Administrable

A framework is only as good as the information that reaches it. The second comment addresses the revised information collection request (CMS-10849), the forms manufacturers and the public use to submit evidence. We recommend a common evidence classification and a triggered methodological supplement: when a response relies on a respondent-generated, sponsor-controlled, unpublished, or model-derived quantitative result whose core methods are not available in a cited public source, the respondent supplies the minimum information needed to evaluate it—design, population, comparator, outcomes, time horizon, economic perspective, and uncertainty. Ordinary narrative submissions and evidence submitted by citation stay exempt. The rule targets an information gap, not a category of speaker or a favored study design.

Read the Full Comments

Both comments are available in full:

• Comment on CMS-4215-P: Evaluating Downstream Healthcare Resource Utilization and Expenditures (PDF)
• Comment on CMS-10849: Drug Price Negotiation Revised Information Collection Request (PDF)

The comments were submitted to CMS on August 17, 2026, and will appear on regulations.gov when the agency posts docket submissions; we will link the official record here when it does. Both were prepared independently—no client funded, requested, commissioned, or reviewed them.

For how this kind of analysis applies to your portfolio—negotiation-exposure modeling, evidence strategy for the section 1194(e)(2) factors, or policy impact assessment—see our health policy and market access practice.