CMS releases revised guidance for Medicare Drug Price Negotiation Program

Photo: dszc/Getty Images

The Centers for Medicare and Medicaid Services has released revised guidance on how it intends to use its authority with pharmaceutical manufacturers in the Medicare Drug Negotiation Program.

For drug companies that have chosen to participate in Medicare, the negotiation is for lower prices on selected covered high-expenditure drugs without generic or biosimilar competition. In the negotiations, CMS will consider the selected drug's clinical benefit, the extent to which it fulfills an unmet medical need, and its impact on people who rely on Medicare, among other considerations, such as costs associated with research and development and production and distribution for selected drugs.

The first round of negotiations, which will occur this year and during 2024 and result in prices that will be effective beginning in 2026, CMS said.

On September 1 CMS will publish the list of the first 10 drugs covered under Part D selected for initial price applicability year 2026.  

The new guidance improves transparency and fosters a more effective negotiation process, CMS. Changes include:

• Clarifications of how CMS will identify selected drugs (e.g., CMS will only consider active designations and approvals when evaluating a drug for the orphan drug exclusion).
• Revisions to and clarifications of the process applicable for participating drug companies of selected drugs (e.g., confidentiality policy revised to state that CMS will release information about the negotiation when the explanation of the maximum fair price is published, and that drug companies may choose to publicly discuss the negotiation at their discretion). 
• Inclusion of additional opportunities for drug companies and members of the public to engage with CMS during the negotiation process on the selected drugs (e.g., through patient-focused listening sessions).

Pharma executives and the head of PhRMA have said the Inflation Reduction Act has the consequence of limiting investment in new drugs at a time when the science is there to innovate. Patients would be the ones affected, they said.

This fall, CMS said it would be hosting a series of patient-focused listening sessions on the drugs selected for negotiation for initial price applicability year 2026. In addition, the public is invited to submit data on therapeutic alternatives to the selected drugs, data related to unmet medical need and data on impacts on specific populations by October 2. More information, including dates for the listening sessions and how to register, is expected to be available in late summer.

Key dates for implementation include:

• By September 1, CMS will publish the first 10 Medicare drugs selected for initial price applicability year 2026 under the Medicare Drug Price Negotiation Program.
• The maximum fair prices that are negotiated for these drugs will be published by September 1, 2024, and prices will be in effect starting January 1, 2026.
• In future years, CMS will select for negotiation up to 15 more drugs for 2027, up to 15 more drugs for 2028 (including drugs covered under Part B), and up to 20 more drugs for each year after that, as outlined in the Inflation Reduction Act.

THE LARGER TREND

CMS issued the initial guidance and sought public comment on key elements of the Medicare Drug Price Negotiation Program in March. The agency received more than 7,500 comments on the initial guidance from consumer and patient groups, drug companies, pharmacies, individuals and other interested parties.

The Inflation Reduction Act gave Medicare has the ability to directly negotiate the prices of covered prescription drugs. For the first time, Medicare is negotiating prices directly with drug companies on behalf of people with Medicare, with the aim of improving affordability for some of the costliest prescription drugs.

ON THE RECORD

"The Inflation Reduction Act and Medicare drug price negotiation allow CMS to better protect the health of people with Medicare by ensuring they can afford the prescription drugs they need," said CMS Administrator Chiquita Brooks-LaSure. "Negotiating with manufacturers on drug prices will improve access to lifesaving drugs for millions of people with Medicare while driving market competition and scientific innovation."
 
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org