HHS releases guidance for second round of drug price negotiations

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The Centers for Medicare and Medicaid Services has released final guidance on the process for the second cycle of drug price negotiations.

Negotiations with participating drug companies will be held in 2025. In February 2025, CMS will announce the selection of up to 15 drugs covered by Part D that are subject to price negotiations. The negotiated prices will be effective starting January 1, 2027.

Guidance for the Medicare Drug Price Negotiation Program explains how Medicare beneficiaries can access their prescriptions at negotiated, lower prices. 

The final guidance also reflects public feedback on the desire for significant engagement between CMS and the participating drug companies. It includes the potential for additional written offers and counteroffers between CMS and participating drug companies during the negotiation process.

WHY THIS MATTERS

In August, the Biden-Harris Administration announced the negotiated prices for the 10 drugs selected for the first cycle of negotiations. The drugs are Januvia; Farxiga; Enbrel; Jardiance; Setalara; Xarelto; Eliquis; Entresto; Imbruvica; and the Fiasp, or NovoLog FlexPen.  

The prices for the first round will become effective in 2026. The negotiated prices are estimated to save Medicare enrollees $1.5 billion in out-of-pocket costs in 2026, CMS said.

The final guidance released Wednesday outlines requirements and parameters for how participating drug companies must ensure eligible people with Medicare prescription drug coverage will have access to the negotiated prices for 2026 and 2027. This includes procedures that apply to participating drug companies, Medicare Part D plans, pharmacies, mail order services and other entities that dispense drugs covered under Medicare Part D.

CMS said it would engage with a Medicare Transaction Facilitator that will serve as the infrastructure in the exchange of data and the optional facilitation of payments to ensure that eligible individuals with Medicare and the pharmacies that serve them have access to the maximum fair prices. 

Drug company use of the Medicare Transaction Facilitator for payment facilitation is voluntary. 

CMS is expected to host monthly technical calls for pharmacies that complement the existing monthly technical calls for Part D plans and drug companies. 

Additionally, based on feedback received, the final guidance outlines improvements to the design of last year's patient-focused engagement events to better understand patient experiences with the selected drugs and their therapeutic alternatives. 

The final guidance incorporates lessons learned from the first cycle of negotiations, as well as comments received on the draft guidance that was published in May. 

In the spring of 2025, during the second cycle of negotiations, CMS will hold up to 15 patient-focused roundtable events, as well as one town hall meeting, to solicit feedback from interested parties, focused on the clinical considerations related to the selected drugs. 

CMS has also released a related information-collection request on the Small Biotech Exception and Biosimilar Delay for the second cycle of negotiations, during a 30-day comment period.

THE LARGER TREND

Drug price negotiation is among several recent initiatives to lower prices, such as the $2,000 cap on out-of-pocket drug costs for people with Medicare prescription drug coverage that goes into effect in January 2025.

The Inflation Reduction Act and an Extra Help financial assistance program allows for a $35 cap on insulin for a month's supply and free recommended adult vaccines in Medicare Part D.

ON THE RECORD

"Today's final guidance for the Medicare Drug Price Negotiation Program builds off the success of the first 10 negotiated drug prices and continues the Biden-Harris Administration's commitment to provide millions of people with Medicare affordable access to innovative therapies," said CMS Administrator Chiquita Brooks-LaSure. "While saving Medicare and taxpayers billions of dollars, the negotiated prices will also provide people with Medicare a better deal on some of Medicare's costliest prescription drugs, promoting necessary competition in the market, and ensuring Medicare is strong today and into the future."

Email the writer: SMorse@himss.org