For the first time, Medicare will negotiate prices directly with drug companies on behalf of people with Medicare, improving affordability for some of the costliest prescription drugs
For the first time in history, Medicare has the ability to directly negotiate the prices of covered prescription drugs due to President Biden’s historic prescription drug law, the Inflation Reduction Act. The Centers for Medicare & Medicaid Services (CMS) (@CMSGov) released revised guidance detailing the requirements and parameters of the new Medicare Drug Price Negotiation Program for the first round of negotiations, which will occur during 2023 and 2024 and result in prices that will be effective beginning in 2026. Alongside other provisions in the new drug law that increase the affordability of health care and prescription drug costs, the Medicare Drug Price Negotiation Program strengthens Medicare’s ability to serve people with Medicare now and for generations to come.
“The Inflation Reduction Act and Medicare drug price negotiation allow CMS to better protect the health of people with Medicare by ensuring they can afford the prescription drugs they need,” said CMS Administrator Chiquita Brooks-LaSure. “Negotiating with manufacturers on drug prices will improve access to lifesaving drugs for millions of people with Medicare while driving market competition and scientific innovation.”
The Biden-Harris Administration has made lowering prescription drug costs and improving access to innovative therapies a key priority. CMS is releasing its revised guidance for how Medicare intends to use its new authority to directly negotiate with drug companies that have chosen to participate in Medicare for lower prices on selected covered high-expenditure drugs without generic or biosimilar competition. In the negotiations, CMS will consider the selected drug’s clinical benefit, the extent to which it fulfills an unmet medical need, and its impact on people who rely on Medicare, among other considerations, such as costs associated with research and development and production and distribution for selected drugs.
“Through the Medicare Drug Price Negotiation Program, we want to drive innovation that will deliver the cures and therapies that people need and can afford,” said Meena Seshamani, M.D., Ph.D. “Public feedback, both through seeking comments on the initial guidance and extensive engagement, has been instrumental in our policymaking and implementation efforts to date. We look forward to ongoing collaboration and engagement with all interested parties on the Negotiation Program and other provisions of the drug law as we continue our thoughtful implementation.”
CMS is releasing the revised guidance with changes from the initial guidance to improve transparency and foster an effective negotiation process. The changes include, for example:
- Clarifications of how CMS will identify selected drugs (e.g., CMS will only consider active designations and approvals when evaluating a drug for the orphan drug exclusion);
- Revisions to and clarifications of the process applicable for participating drug companies of selected drugs (e.g., confidentiality policy revised to state that CMS will release information about the negotiation when the explanation of the maximum fair price is published and that drug companies may choose to publicly discuss the negotiation at their discretion); and
- Inclusion of additional opportunities for drug companies and members of the public to engage with CMS during the negotiation process on the selected drugs (e.g., through patient-focused listening sessions).
CMS issued the initial guidance and sought public comment on key elements of the Medicare Drug Price Negotiation Program in March 2023. The agency received more than 7,500 comments on the initial guidance from consumer and patient groups, drug companies, pharmacies, individuals, and other interested parties.
By September 1, 2023, CMS will publish the list of the first 10 drugs covered under Part D selected for initial price applicability year 2026 under the Medicare Drug Price Negotiation Program. As part of the negotiation process, CMS will continue to collaborate and engage with the public in the implementation of the Inflation Reduction Act. This fall, CMS will host a series of patient-focused listening sessions on the drugs selected for negotiation for initial price applicability year 2026. These public sessions will be an opportunity for patients, caregivers, patient advocacy organizations, and others to share input on a selected drug’s therapeutic alternatives, how the drug addresses unmet medical need, and how the drug impacts specific populations. In addition, the public is also invited to submit data on therapeutic alternatives to the selected drugs, data related to unmet medical need, and data on impacts on specific populations by October 2, 2023. More information, including dates for the listening sessions and how to register, will be available in late summer.
This revised guidance is one of a number of steps CMS detailed in the Medicare Drug Price.
Negotiation Program timeline for the first year of negotiation. Other key dates for implementation include:
- By September 1, 2023, CMS will publish the first 10 Medicare drugs selected for initial price applicability year 2026 under the Medicare Drug Price Negotiation Program.
- The maximum fair prices that are negotiated for these drugs will be published by September 1, 2024, and prices will be in effect starting January 1, 2026.
- In future years, CMS will select for negotiation up to 15 more drugs for 2027, up to 15 more drugs for 2028 (including drugs covered under Part B), and up to 20 more drugs for each year after that, as outlined in the Inflation Reduction Act.
View a fact sheet on the Medicare Drug Price Negotiation Program Revised Guidance.
Read the Medicare Drug Price Negotiation Program Revised Guidance.
View additional information and resources related to Medicare Drug Price Negotiation.