Recently, the Centers for Medicare and Medicaid Services (CMS) issued guidance on the second round of the drug price negotiation program, launched as part of the Inflation Reduction Act. The first round of negotiations for the first set of drugs ended in August 2024 and the new prices are set to go into effect on January 1, 2026.
This new round of negotiations will focus on selecting fifteen drugs for negotiation, with new prices going into effect on January 1, 2027. For this second round of negotiations, the drugs will be selected by February 1, 2025. Additionally, during this round CMS will work with a Medicare Transaction Facilitator whose goal is to ensure fair prices for Medicare beneficiaries and pharmacies. The participation by drug manufacturers is voluntary.
This year’s negotiation process will be similar to last year’s process. This time, however, CMS will allow for additional offers and counteroffers if CMS rejects the first offer of the manufacturer. CMS is making this change in hopes of “opportunities for productive exchanges between CMS and participating drug companies throughout the negotiations period.” To that end, CMS is revising the timing of negotiation meetings so that the first optional negotiation meeting will happen after the initial offer is issued but before the statutory due date for participating drug companies that elect to submit statutory written counteroffers. If CMS rejects a written counteroffer, the agency will allow for up to two more optional negotiation meetings.
Under the guidance released by CMS, drug companies, health plans, pharmacies, and mail order services are instructed to follow price requirements in January 2026 and beyond using the Medicare Transaction Facilitator.
CMS plans to hold up to fifteen patient-focused roundtables and one town hall meeting to solicit clinical and patient feedback regarding the selected drugs, on top of monthly technical calls for pharmacies, Part D plans, and pharmaceutical companies. In addition, CMS is inviting the public to submit data by March 1, 2025, regarding patient experiences with the conditions or diseases treated by the selected drugs or experiences taking the selected drugs (and therapeutic alternatives to selected drugs), prescribing information for selected drugs (and therapeutic alternatives), and/or information on the extent to which the selected drugs address an unmet medical need.
Additionally, CMS has established a process for pharmacies to self-identify if they anticipate material cash flow concerns at the start of the initial price applicability year due to reliance on retrospective maximum fair price (MFP) refunds within the 14-day prompt MFP payment window. CMS would provide that information to participating drug companies to inform the development of their MFP effectuation plans.
Looking forward, February 1, 2025, is the deadline for CMS to publish the list of up to 15 drugs selected for negotiation and February 28, 2025, is the deadline for participating drug companies to sign agreements to participate in the Negotiation Program for applicability year 2027. March 1, 2025, is the deadline for participating drug companies to submit manufacturer-specific data to CMS for consideration in the negotiation process as well as the deadline for public to submit data and comments. Throughout Spring 2025, CMS will host the roundtable and town hall events and June 1, 2025, is the deadline for CMS to send the initial offer of a maximum fair price for a selected drug, with a concise justification, to each participating drug company. From there, the negotiation process will begin and October 31, 2025, is the deadline for participating drug companies to accept or reject the final maximum fair price offer from CMS as on November 1, 2025, the negotiation period ends.
“We are continuing to implement the prescription drug law thoughtfully, prioritizing engagement with all interested parties, and ensuring the process is as transparent and inclusive as possible,” said Meena Seshamani, M.D., Ph.D., deputy administrator for CMS, in a statement. “As we approach the second cycle of negotiations, we continue to focus on ensuring people with Medicare prescription drug coverage have access to the innovative cures and therapies they need at prices they can afford.”