As a result of President Biden’s Inflation Reduction Act, Medicare can directly negotiate prices of prescription drugs covered under Medicare Part B or Part D. The initial guidance on the Medicare Drug Negotiation Program was released this past March and requested public comment on its key program elements. Since then, the Centers for Medicare and Medicaid Services (CMS) received more than 7,500 comments from consumer groups, drug companies, pharmacies, and individuals.
Now, revised guidance has been released by the CMS regarding its authority with pharmaceutical manufacturers in the program.
The following updates in the revised guidance were introduced in an effort to improve transparency and the negotiation process.
- The guidance provides clarification on how the CMS will identify selected drugs. Only active designations and approvals will be considered when evaluating an orphan drug exclusion.
- The process for participating drug companies has been revised. Once the maximum fair price explanation is published, the CMS will release additional information regarding the negotiation. At that point, companies may publicly discuss the negotiations.
- The CMS will be available to drug companies to engage with during the negotiation process through patient-focused listening sessions in addition to the options announced in the initial guidance.
Drug Selection Timeline
By September 1, 2023, the CMS will announce the first 10 drugs covered under Part D selected for negotiations. The maximum fair prices for these selected drugs will be published by September 1, 2024, and the prices will be effective January 1, 2026.
For 2027, the CMS will identify up to 15 additional drugs and another 15 drugs for 2028, and up to 20 more each following year.
As more information is made available, Creative Benefits, Inc. will continue to release updates.