The U.S. Department of Health and Human Services on Wednesday released its timeline for negotiating prices on an initial tranche of Medicare drugs, a new power granted to the agency by last year’s Inflation Reduction Act.
Under the law, Medicare can negotiate prices for top-selling drugs that have no competition, starting with 10 in 2026 and rising to a total of 60 by 2029. But the law didn’t fully detail the process by which that will happen. Those will be worked out through regulatory rulemakings and public comment periods that HHS detailed today.
“We will be transparent and aggressive in implementation every step of the way,” HHS Secretary Xavier Becerra said in a statement.
The Centers for Medicare and Medicaid Services will release initial guidance in the spring for how it will implement price negotiations, including provisions for exchanging offers and counteroffers with drugmakers. CMS will publish revised guidance for the procedures in the summer after collecting comments from the public, drugmakers, Medicare plans and the healthcare industry.
“We are proactively seeking feedback and insights from a broad range of interested parties throughout implementation of this historic law,” CMS Administrator Chiquita Brooks-LaSure said in a statement.
CMS will publish a list of the first 10 drugs selected by Sept. 1, 2023, followed by negotiations lasting from February to August 2024. Agreed-upon prices will be released on Oct. 1, 2024. The law directs CMS to focus on single-supplier drugs that account for the highest spending in Medicare.
Among the topics CMS will seek feedback on include the negotiation process, a dispute resolution framework, compliance monitoring and fines for violations. It will also ask for input on how to consider drugmaker data and evidence regarding alternative treatments.
The pharmaceutical industry might challenge some of these provisions in court. The law did not require the agency to seek public comment on all the issues, so the outreach is “likely designed to head off one potential legal avenue for the drug lobby,” Cowen Washington Research Group analyst Rick Weissenstein wrote in a note Wednesday.
Drug companies have warned that the law — the first major defeat for the U.S. drug lobby in decades — could have unintended effects, such as shifting investment away from small molecule drugs and rarer cancer indications.
Proponents of the law, meanwhile, applauded the timeline rolled out Wednesday.
“Today’s announcement is a critical step towards unshackling Medicare and delivering on the promise of drug pricing fairness,” Senate Finance Committee Chair Ron Wyden, D-Ore., said in a statement. “These historic provisions, along with reforms that are already in effect to cap insulin costs and ensure free access to vaccines, will reduce costs for millions of seniors across the country.”
The law capped Medicare patients’ monthly out-of-pocket insulin costs at $35, and starting this year drugmakers must pay a rebate for any Medicare drug price increases that exceed the rate of inflation.
Key dates for the rollout of Medicare drug price negotiations
|Spring 2023||CMS will issue initial guidance for drug price negotiation procedures.|
|Summer 2023||CMS will update guidance for negotiation process and seek additional comment on data collection.|
|9/1/2023||CMS will publish the first 10 Medicare drugs selected for negotiation for 2026.|
|10/1/2023||Deadline for companies to sign agreements to participate in negotiations.|
|2/1/2024||CMS sends initial offers of a maximum fair price, beginning negotiations.|
|3/2/2024||Deadline for companies to accept the offer or propose a counteroffer.|
|8/1/2024||Negotiation period ends.|
|9/1/2024||CMS publishes maximum fair prices for the 10 drugs that take effect in 2026.|