CMS seeks input on 1st-ever Medicare drug negotiation process

CMS laid out more details on how it plans to implement the first-ever negotiation process of drug prices under Medicare, which will first apply in 2026.

In the initial guidance issued March 15, the agency laid out how it will select drugs for negotiation, develop initial offers and establish requirements for manufacturers of selected drugs. 

The agency plans to publish a list of the first 10 Part D drugs chosen for negotiation in September 2023. These drugs will be the single-source drugs with the highest Part D expenditures over a 12-month period, according to the agency's guidance. CMS will select for negotiation 15 more Part D drugs for 2027, 15 more Part B or Part D drugs for 2028, and 20 more Part B or Part D drugs for each year after that.

The criteria the agency will use to create an initial offer for prices include: 

  • The price of therapeutic alternatives to the drug, if any exist
  • The clinical benefit of the drug, including if it meets an unmet medical need 
  • The drug's impact on the Medicare population 

The initial guidance does not yet include a process for renegotiating prices each year, the agency said. 

Medicare is the largest prescription drug buyer in the country, and those drugs account for more than one in four healthcare dollars the agency spends. If the drug negotiation program was implemented in 2018, it would have saved the government $26.5 billion — or 5 percent of estimated net Medicare drug spending — over a three-year period, according to a study published in JAMA Health Forum.

CMS is seeking feedback on several portions of its initial guidance, including the process for offers and counteroffers with drug manufacturers, dispute resolutions and compliance monitoring.  

The initial guidance is open for comment until April 14. CMS anticipates publishing updated guidance based on feedback in summer 2023. 

Read more here.

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