CMS plans to announce first Part D drugs subject to price negotiations this fall

The Biden administration plans to announce the first 10 drugs that will be subject to Medicare price negotiation on Sept. 1, with a goal of having the final price in place by 2026. 

The Centers for Medicare & Medicaid Services (CMS) announced key implementation dates for Medicare price negotiations passed as part of the Inflation Reduction Act. Agency officials emphasized a desire to hear from stakeholders on how the drugs are selected and the structure of the negotiation process. 

“We are offering interested parties a look ahead at upcoming policymaking opportunities and opportunities to contribute in the first year of the Medicare drug price negotiation program,” said Meena Seshamani, director of Medicare for CMS, during a call with reporters Wednesday. 

Later this year CMS plans to release guidance on the application of the negotiated price. 

On Sept. 1, the agency will publish a list of the 10 Part D drugs selected for negotiation. By Oct. 1, the manufacturers must sign an agreement with the federal government to start negotiations. Manufacturers can submit data elements that can affect negotiation like the production and distribution costs as well as research and development expenses.

On Feb. 1, 2024, CMS will send an initial fair price offer to each of the manufacturers for the drugs, and the companies have 30 days to counter. 

The negotiation period will end by Aug. 1, 2024, and the list of fair prices for the drugs will be published by Sept. 1, 2024. 

The brand name drugs selected will be offered under Medicare Part D. The law exempts certain products from being subject to negotiations, including generics or biosimilars and any product that has been on the market for less than nine years. A biologic that has been approved by the Food and Drug Administration for less than 13 years is also exempt.

If a drug manufacturer decides to not participate then they could face an excise tax on the drug. Manufacturers could also face fines if they submit fraudulent information to CMS once they enter into negotiations.

The number of drugs expected to be subject to negotiation will balloon in the coming years, increasing to 15 more products in 2027, 15 more in Part B and D in 2028 and 20 more for each year thereafter. 

Seshamani said in a statement that the timeline is intended to give stakeholders “the predictability they need to contribute to our implementation efforts. We want the public to know when and how they can make their voices heard on forthcoming policies.”

She said on the call that CMS will also be holding monthly technical calls, strategic policy meetings and roundtables on the implementation of the negotiation. 

The pharmaceutical industry fervently fought the negotiation framework when it was debated in Congress last year, arguing that it will stifle innovation.

The drug price negotiation framework is one of several pharmaceutical reforms included in the Inflation Reduction Act. Other changes include a $35 monthly cap on insulin costs for Medicare beneficiaries and a cap on any Part D drug prices that surge past inflation. 

While CMS has issued a timeline for implementing the law, some Democrats are pressing for the agency to speed up its efforts. 

Rep. Lloyd Doggett, D-Texas, wrote in an op-ed that he wants Biden to use several executive powers to lower prices now, including a call for enabling generic competition earlier for brand name drugs.