New Medicare Drug Negotiation Program: Initial guidance from CMS
Because of the Inflation Reduction Act, Medicare will have the ability to negotiate lower prescription drug prices with manufacturers - and will release the negotiated fair prices for the first 10 drugs September 1.
The ability for Medicare to negotiate lower prescription drug costs was a key component of last year’s Inflation Reduction Act. The Centers for Medicare & Medicaid Services this week issued initial guidance about the requirements and parameters of the Medicare Drug Price Negotiation Program for 2026, the first year in which the negotiated prices will apply.
“Drug price negotiation is a critical piece of how this historic law improves the Medicare program,” CMS Administrator Chiquita Brooks-LaSure said. “By considering factors such as clinical benefit and unmet medical need, drug price negotiation intends to increase access to innovative treatments for people with Medicare.”
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Brooks-LaSure and Dr. Meena Seshamani, CMS deputy administrator and director of the Center for Medicare, discussed implementation of the law during a March 16 webinar. Among other things, the initial guidance details how CMS intends to identify selected drugs, consider factors in negotiation, conduct the negotiation process and establish requirements for manufacturers of selected drugs. CMS will accept only one formal written counter offer during the negotiation process but will allow up to three additional in-person or virtual negotiation meetings,
The first set of negotiations will occur during 2023 and 2024 and result in prices effective in 2026. Key dates for implementation include:
- CMS will publish the first 10 Medicare Part D drugs selected for initial price applicability in 2026 by September 1.
- The negotiated maximum fair prices for these drugs will be published by Sept. 1, 2024, and prices will be in effect starting Jan. 1, 2026.
- In future years, CMS will select for negotiation up to 15 more Part D drugs for 2027, up to 15 more Part B or Part D drugs for 2028 and up to 20 more Part B or Part D drugs for each year after that, as outlined in the Inflation Reduction Act.
CMS is seeking comment (email to IRARebateandNegotiation@cms.hhs.gov) on several key elements in the initial guidance. Comments received by April 14 will be considered for revised guidance, which is expected to be issued this summer.
“Negotiation is a powerful tool that will drive drug companies to innovate to stay competitive, fostering the development of new therapies and delivery methods for the treatments people need,” Seshamani said. “This initial guidance is the next step in the extensive engagement CMS has had to date with interested parties, and we look forward to continuing to receive comment on key policy areas and engage with the public as we implement the negotiation program.”