Reviewing CMS Draft Guidance for the Medicare Drug Price Negotiation Program (Updated May 2024)

Medicare drug price negotiation, impacts and considerations for plans

Several months ago, I wrote a blog about the Medicare Drug Price Negotiation Program (Negotiation Program) within the Inflation Reduction Act. The Negotiation Program “allows Medicare to directly negotiate with participating manufacturers the prices for certain high expenditure, single source Medicare drugs covered under Part B or Part D. Since then, we’ve received draft guidance from the Centers for Medicare and Medicaid Services (CMS) as of May 3, 2024 outlining “requirements and parameters for the second cycle of negotiations for the Negotiation Program, which will occur during 2025 and may result in negotiated Maximum Fair Prices (MFPs) that would be effective beginning in 2027.”

For more information on the Negotiation Program, please refer to my previous blog. I have consolidated the key takeaways from the recent CMS draft guidance below, along with their relevance to plans.

Summary of Notable May 3^rd Draft Guidance Changes for Health Plans:

• CMS put forth a revised timeline based on their learnings from the 2026 Selected Drug Negotiation.  Examples of key dates impacted include:
  • February 1, 2025: CMS will announce the 2027 Selected Drugs (was end of August 2024)
  • October 31, 2025: Deadline for Manufacturers to accept CMS’ best and final offer (was July 31, 2025)
• November 30, 2025: CMS will publish 2027 Selected Drugs’ Maximum Fair Price (was September 1, 2025)CMS addressed the requirements of Manufacturers to reimburse pharmacies who purchase Selected Drugs at a cost higher than Maximum Fair Price, how the reimbursement to Pharmacies will be calculated, how Pharmacies can challenge if that reimbursement still does not make them whole and the outstanding need for a third party to coordinate between CMS, Manufacturers and Pharmacies referred to as the Medicare Transaction Facilitator (MTF).
  • PSG believes that many PBMs may be in discussions with CMS to fill the MTF role given their established financial relationships with Manufacturers and Pharmacies
• CMS re-emphasized their expectations of Medicare Plan Sponsors to cover and promote the Selected Drugs on Part D formularies. CMS will be monitoring for any attempts to disadvantage Selected Drugs on formularies through the annual Stage Review process.

What to watch for in 2024: Looking Ahead 

PSG is closely following these upcoming milestones: 

1. Outcome of lawsuits against CMS.
2. Initial decisions on a few of the lawsuits have all gone in CMS’ favor.  Those lawsuits are now moving to appellate courts to further test the assertions of PhARMA and Manufacturers.Publishing of 2026 Selected Drug MFP in September 2024.  Having a negotiated price publicly available will be monumental, not only in the measurement of the success of this program but also the first time a government negotiated price for a drug is published. 
3. Finalization of 2027 Selected Drug MFP Negotiation guidance

In terms of which drugs are likely next to be selected, we did a refreshed analysis based on 2022 Part D data.  Most notable is the addition of Wegovy since it now has a medically accepted indication under Medicare Part D.

PSG has the market data and expertise to provide valuable insights as you continue to navigate this post-Inflation Reduction Act landscape. Contact us to learn more about how we can help with the Medicare Drug Negotiation Program.

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