In accordance with the Inflation Reduction Act, the US Department of Health and Human Services (HHS) announced that Medicare will begin drug price negotiations for prices going into effect in 2026 and released a memo that details the process.
“Under President Biden’s leadership, we will begin the process of negotiating lower prescription drug prices for millions of seniors and people with disabilities across the country,” HHS Secretary Xavier Becerra said in the press release.
“Thanks to the Inflation Reduction Act, we finally have the authority to get American families the lower prescription drug costs they deserve. Today we are releasing our plan for how we will implement Medicare drug price negotiation under this landmark law — and we will be transparent and aggressive in implementation every step of the way.”
Overall, the process requires four steps. First, CMS has to identify Medicare drugs that will be eligible for negotiation under the Inflation Reduction Act. Second, the agency has to choose a certain number of drugs from those that are eligible to negotiate the prices. Third, CMS must gather the appropriate data. And finally, Medicare and participating pharmaceutical companies will participate in an offer and counteroffer process.
The memo outlined 13 timeframes between January 2023 and January 2026. The memo, released on January 11, 2023, represents the first step: CMS will publish a timeline detailing the opportunities for public engagement and feedback as federal agencies hammer out negotiations.
In the winter of 2023, CMS will release proposed data collection processes and requirements for the negotiation program. These data collection processes will be used to assess medications that would be exempt due to the small biotech manufacturer exemption.
In spring of 2023, the agency will request public commentary on the negotiation process guidance as well as its data collection process proposal. Specifically, CMS will be looking for comments on the offer and counteroffer process and the maximum fair prices element.
One element which is already underway is the timeframe for total expenditures data. Total expenditures data will span from June 1, 2022 to May 31, 2023. Based on this data, CMS will identify drugs that will have negotiable prices.
The fourth timeframe is the summer of 2023. At this point, CMS will incorporate the comments into its proposals and continue to seek comments on data and information collection proposals.
Once these proposals are finished, the timeline accelerates slightly.
On September 1, 2023, payers and stakeholders can expect a list of 10 Medicare Part D drugs that will be negotiated for 2026. Then a month later, the pharmaceutical companies behind negotiable drugs will have to sign participation agreements. The next day—October 2, 2023—pharmaceutical companies have to submit manufacturer-specific data which will be critical to establishing the maximum fair price.
The negotiation process runs from February through August 2024. On February 1, 2024, negotiations begin. CMS will kick off the negotiation process by sending its initial maximum fair price offers and explanations to participating manufacturers. On March 2, 2024, pharmaceutical companies will have to accept the negotiated price or counteroffer. The negotiation period ends August 1, 2024.
The maximum fair prices for 2026 will publish on September 1, 2024. They go into effect on January 1, 2026.
“Public feedback is critical to our ability to successfully implement this law and ensure access to innovative, affordable therapies and treatments,” Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare, said in the press release. “Through this detailed timeline, we offer 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.”
One element of the Inflation Reduction Act has already taken effect, the payment boost for biosimilars. Payers praised the law when it passed, although they warned that pharmaceutical companies might shift costs to consumers.Source: Health Payer Intelligence