The Biden administration has released new guidance for its program that will allow Medicare to directly negotiate the prices of certain drugs with manufacturers.
The updated guidelines clarify how the Centers for Medicare & Medicaid Services (CMS) will identify selected drugs and offers additional detail on the process for the companies that make those selected drugs, according to a news release. The agency said it will also offer additional opportunities for both drugmakers and the public at large to engage with it as the negotiations continue.
In a fact sheet (PDF), CMS said that it will only consider active designations and approvals when considering potential orphan drug exclusions and said that it will "certain cost-effectiveness measures to the extent permitted by statute" in the initial negotiations. The guidance also says that pharmaceutical manufacturers are able to publicly discuss the negotiations at their discretion and that the agency will publish additional details about the negotiation when the price is released.
CMS intends to publish a list of the first 10 drugs under negotiation by Sept. 1, which will result in prices effective in 2026 as negotiations continue through 2023 and 2024. The agency said it plans to release the maximum fair prices for these products by Sept. 1, 2024.
CMS said it will take a slew of factors into consideration during the negotiations.
"In the negotiations, CMS will consider the selected drug’s clinical benefit, the extent to which it fulfills an unmet medical need, and its impact on people who rely on Medicare, among other considerations, such as costs associated with research and development and production and distribution for selected drugs," CMS said in the release.
In a statement, Department of Health and Human Services Secretary Xavier Becerra called the program a "critical step" in the administration's goal to drive down drug prices. He also called out pharma companies and lobbying groups that have taken the fight to eliminate the negotiations to the courts.
“The Biden-Harris Administration isn’t letting anything get in our way of delivering lower drug costs for Americans,” Becerra said. “Pharmaceutical companies have made record profits for decades. Now they’re lining up to block this Administration’s work to negotiate for better drug prices for our families. We won’t be deterred."
CMS plans to select up to 15 additional drugs for negotiation in 2027 and 2028 and up to 20 more products in each subsequent year.
Once the initial crop of 10 drugs is posted, drugmakers and the public will have until Oct. 2 to submit data and information on these products. Later this year, CMS will invite each pharmaceutical company that has a drug selected to a meeting on the data. It will then send an initial pricing offer to each company by Feb. 1, 2024, and the company will then have 30 days to respond either by accepting the offer or issuing a counteroffer.
Throughout the spring and summer of 2024, the drugmakers will be invited to negotiation meetings with CMS, and the process will end Aug. 1, according to the fact sheet.