Reducing prescription drug prices for seniors on Medicare and drug spending for the government is a longstanding priority with bipartisan support. The Inflation Reduction Act (IRA), signed into law last August, introduced provisions designed to cut costs. Most notably, it authorized Medicare — for the first time — to negotiate prices with pharmaceutical manufacturers for certain high-priced prescription drugs with no generic or biosimilar competitors. According to the Congressional Budget Office, this will save an estimated $100 billion over 10 years.
Seniors will see the negotiated prices take effect in 2026, but the negotiation process itself will begin later this year. Successful implementation of the program is essential to realizing the cost savings Congress sought. On January 11, the Centers for Medicare and Medicaid Services (CMS) released a memo and timeline outlining its approach to implementing the first year of the Medicare drug negotiation process. These documents lay out how CMS is approaching implementation — including information on how it will engage with the public and when it will provide program guidance — and suggest a commitment to obtaining public input beyond even the requirements in the IRA.
The IRA specified key dates in implementing the negotiation process. Starting in September 2023, CMS must announce which drugs have been selected for negotiation. The plan for 2023 includes various opportunities for stakeholder comment and engagement on key topics and program design elements. CMS is allowing stakeholders to prepare for opportunities to engage and comment on the offer and counteroffer process between Medicare and prescription drug companies, the methodology for applying maximum fair prices, and what data should be collected by CMS.
Opportunities for Public Comment and Engagement in Year 1
Because of the short timeline specified in the IRA, CMS was instructed to use administrative guidance to implement the negotiation provisions. This process does not require comment periods for public input. However, CMS has voluntarily elected to solicit stakeholder input before September 2023 on issues including:
- Data to determine which drugs qualify for the small biotech exemption — i.e., a drug may be excluded from selection for negotiation during the first three years because it represents less than 1 percent of total Medicare Part D or Part B spending and it represents at least 80 percent of the manufacturer’s business
- The manufacturer-specific data to determine maximum fair prices
- Information manufacturers must provide in any counteroffers during the price negotiation process (e.g., research and development, production, distribution costs).
CMS also has indicated the intent to hold quarterly strategic meetings and monthly technical calls with stakeholders and has established mechanisms the public can use to provide written feedback. CMS is expected to release additional details — for instance, pertaining to renegotiation of drugs — later this year.
CMS’s memo indicates the many opportunities stakeholders will have for input and comment. This added expertise — which will include engagement from patients, patient advocates, pharmaceutical manufacturers, health plans, and clinicians — can help shape the negotiation program from its inception.