After finalizing its first round of negotiations for the first 10 drugs in the Medicare Drug Price Negotiation Program in August, the Centers for Medicare & Medicaid Services has announced plans for round 2 of negotiations with top drugmakers.
As part of the Inflation Reduction Act, CMS released final guidance Wednesday outlining the process for the second cycle of negotiations under the Medicare Drug Price Negotiation Program.
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"HHS, for the first time ever, negotiated directly with pharmaceutical manufacturers to lower drug prices for Medicare," said HHS Secretary Xavier Becerra. "The new, lower prices for the first 10 drugs will save billions for the American people. Today, we lay the groundwork for the second round of negotiations."
CMS will announce the selection of up to 15 additional drugs covered by Part D for the second cycle of negotiations by February 1, 2025. This second cycle of negotiations with participating drugmakers will occur during 2025, with a final decision on prices due by Nov. 30, 2025. Any negotiated prices for this second set of drugs will be effective starting January 1, 2027.
The final guidance also includes the potential for additional written offers and counteroffers between CMS and participating drug companies during the negotiation process.
In 2023, after the first 10 drugs were announced for the Medicare program, drugmakers Merck, Bristol Myers Squibb, Johnson & Johnson and others, as well as the Chamber of Commerce and the Pharmaceutical Research and Manufacturers of America (PhRMA) filed lawsuits challenging the program, calling the plan "extortion."
Most of these efforts have been largely unsuccessful, however, in September, a federal appeals court in New Orleans reversed the dismissal of PhRMA's lawsuit, sending the complaint back to a lower Texas court.
Related: Medicare drug price negotiations begin, as CMS sends initial offers to top drugmakers
The negotiated prices in the first round are estimated to save people enrolled in Medicare prescription drug coverage $1.5 billion in out-of-pocket costs in 2026 when they go into effect in 2026.
CMS' final guidance states that CMS will 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 utilization of the Medicare Transaction Facilitator for payment facilitation is voluntary.
Starting in October, CMS will host monthly technical calls for pharmacies that complement the existing monthly technical calls for Part D plans and drug companies.
The guidance states that, in Spring 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.
"We are continuing to implement the prescription drug law thoughtfully, prioritizing engagement with all interested parties, and ensuring the process is as transparent … as possible," said Dr. Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare.
A fact sheet on the Medicare Drug Price Negotiation Program Final Guidance for Initial Price Applicability Year 2027 and Manufacturer Effectuation of the Maximum Fair Price in 2026 and 2027 is now available.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
