CMS Releases Revised Guidance for Medicare Price Negotiation

The Centers for Medicare & Medicaid Services (CMS) released today revised guidance detailing the requirements of the new Medicare Drug Price Negotiation Program under the Inflation Reduction Act. This legislation, signed by President Joseph R. Biden in August 2022, permits Medicare to directly negotiate prices for certain high expenditure, single source Medicare Part B or Part D drugs. In the revised guidance, CMS outlined additional opportunities for engagement during the negotiation process. CMS also clarified various aspects of the negotiation process.

Meena Seshamani, M.D., Ph.D.

“Public feedback, both through seeking comments on the initial guidance and extensive engagement, has been instrumental in our policymaking and implementation efforts to date,” Meena Seshamani, M.D., Ph.D., CMS deputy administrator and director, Center for Medicare at CMS, said in a press release.

The changes include, for example:

• Clarifications of how CMS will identify selected drugs. 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. Confidentiality policy revised to state that CMS will release information about the negotiation when the explanation of the maximum fair price is published
• Clarifications of how CMS will engage with compliance and oversight.
• Inclusion of additional opportunities for drug companies and members of the public to engage with CMS during the negotiation process on the selected drugs.

CMS had issued the initial guidance in March 2023. The agency received more than 7,500 comments from consumer and patient groups, drug companies, pharmacies, and individuals. By Sept. 1, 2023, CMS will publish the list of the first 10 drugs for negotiation. By September 2024, the prices for these drugs will be published, and they will go into effect on Jan. 1, 2026.

This fall, CMS will host a series of sessions on the drugs for patients, caregivers, patient advocacy organizations, and others to share input on the selected drugs. In addition, the public is also 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 Oct. 2, 2023.

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.

Related: HHS Names 27 Drugs Subject to Medicare Inflation Rebates

The Inflation Reduction Act also include the Medicare Part D inflation rebate program, which applies to single source drugs and biological products. Companies that increase their prices faster than the rate of inflation will be required to provide a rebate to Medicare. As a result, beneficiary coinsurance will be 20% of the inflation-adjusted payment amount, which will be less than what the beneficiary would pay currently. In March, the Department of Health and Human Services has named the first set of prescription drugs that will be subject to inflation rebates.