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. 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. Additionally, CMS set up the next tranche of drugs to face price hike penalties.
New Guidance
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 September 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.
In terms of qualifying single source drugs, CMS did not change much from the initial guidance. This is despite significant stakeholder feedback opposing language related to the same active moiety/ingredient standard. On the “bona fide marketing” standard, CMS did not change fundamental items from the initial guidance. In this guidance, CMS notes that average manufacturer price (AMP) data will also be used to make the determination. Furthermore, CMS did not change language in the final guidance regarding how drugs will be selected for negotiation. CMS declined a request by some commenters to notify manufacturers of selected drugs before publication of the selected drug list, noting that it would be “operationally infeasible due to the time constraints required to meet statutory deadlines and the complexity of the preparation that must be undertaken in advance.”
Price Hike Penalties
CMS said it will levy penalties on the manufacturers of 43 prescription drugs for increasing prices within Medicare faster than inflation, flexing new powers granted to it under last year’s Inflation Reduction Act As a result, Medicare beneficiaries will pay lower coinsurance rates for those 43 Part B medicines next quarter. The new list is larger than an initial slate of 20 published in March for last quarter, the first period in which the CMS could lower coinsurance as a result of the law. Many of the drugs included are older medicines, including heparin-based anticoagulants, anti-infectives and immunoglobulins. But the 43 drugs named also include several cancer treatments from Amgen and Seagen, and AstraZeneca’s new asthma injection.