Medicare Drug Price Negotiations See New Guidance From CMS

The Biden administration has issued new guidelines for its program that enables Medicare to directly negotiate drug prices with manufacturers. The updated guidelines provide clarity on how the Centers for Medicare & Medicaid Services (CMS) will identify the drugs eligible for negotiation and offer additional details on the process for the pharmaceutical companies involved. The CMS also announced its intention to involve both drugmakers and the public in the negotiations by providing additional opportunities for engagement.

According to insights, the CMS will consider only active designations and approvals when assessing potential exclusions for orphan drugs. Additionally, the agency will incorporate “certain cost-effectiveness measures allowed by law” during the initial negotiations. The guidelines specify that pharmaceutical manufacturers have the discretion to publicly discuss the negotiations, and the agency will release more information once the prices are finalized.

The CMS plans to publish a list of the first 10 drugs undergoing negotiations by September 1, with the negotiated prices taking effect in 2026. The negotiations are scheduled to take place throughout 2023 and 2024. By September 1, 2024, the agency aims to disclose the maximum fair prices for these products.

During the negotiations, the CMS will consider several factors, including the clinical benefits of the selected drugs, their impact on individuals relying on Medicare, and the extent to which they address unmet medical needs. The costs associated with research and development, production, and distribution of the drugs will also be taken into account.

For the years 2027 and 2028, the CMS plans to select up to 15 additional drugs for negotiation, followed by up to 20 more products each subsequent year. Once the initial list of 10 drugs is published, drug manufacturers and the public will have until October 2 to provide data and information on these products. Later in the year, the CMS will invite each pharmaceutical company with a selected drug to a data-focused meeting.

By February 1, 2024, the agency will send an initial pricing offer to each company, giving them 30 days to accept or counteroffer. Negotiation meetings between the drugmakers and the CMS will take place in the spring and summer of 2024, with the process concluding on August 1.