Sept. 1 Is Kickoff Date for Medicare Prescription Drug Price Negotiations

Leaders of the Department of Health and Human Services (HHS) and Medicare outlined on Jan. 11 the timetable they will follow to identify the drugs to be negotiated, along with the data the government will use to make its initial price offers and the process HHS and drugmakers will follow between this fall and 2026, when the first negotiated Medicare prescription drug prices will take effect.

“We know that on average, Americans are paying two to three times more for some of the same drugs that are being sold in other parts of the world for no reason whatsoever,” HHS Secretary Xavier Becerra said Jan. 11 in a call with reporters to outline the negotiation process.

Price negotiations under Medicare are being made possible for the first time under a sweeping budget law passed in the summer of 2022 that includes a number of provisions to help Medicare beneficiaries better afford lifesaving medications. Also under that law: Beginning this year, Medicare enrollees will see the out-of-pocket monthly cost of covered insulins capped at $35 and federally recommended vaccines available for free. Penalties will be levied on drug companies that raise prices more than the rate of inflation.

“Finally, thanks to this new law, Medicare will begin to use its buying power to get a better deal for American seniors and American taxpayers by negotiating for lower drug prices,” says Bill Sweeney, AARP senior vice president for government affairs. “And this is huge — we know it will save Medicare more than $100 billion — which just goes to show how much Americans have been overpaying for our medicine all these years.”

Under the new law, the first group of 10 drugs that will be subject to negotiation must be among the drugs that Medicare spends the most on. The selected medicines cannot have any direct competitor, including no generic equivalent. The drugs must have been on the U.S. Food and Drug Administration’s approved list for many years — seven years for medicines typically taken in pill form and 11 years for biologics, complex medications typically used to treat cancers and other serious illnesses.

Here’s the initial timetable for the negotiation process:

• Sept. 1, 2023: CMS will make public the list of the 10 Medicare Part D drugs whose prices will be negotiated for 2026.
• Oct. 1: Deadline for manufacturers of those 10 drugs to agree to participate in the negotiation process.
• Oct. 2: Deadline for the drugmakers of the 10 medications to provide CMS with the data it needs to determine a “maximum fair price.”
• Feb. 1, 2024: The negotiation period begins as CMS provides the drugmakers with its initial maximum fair price offer.
• March 2: Drugmakers must accept the CMS price offer or propose another price.
• Aug. 1: Negotiation period ends.
• Sept 1: CMS will publish the list of maximum fair prices.
• Jan. 1, 2026: Maximum fair prices take effect for the first 10 drugs.

Medicare officials said the negotiation process will include multiple ways for the public to comment and get involved.

“Input from our partners is essential to effectively and expeditiously implement the Medicare drug pricing negotiation authority,” CMS Administrator Chiquita Brooks-LaSure said on the press call. “We are committed to engaging with our partners through our timeline to maximum transparency, predictability and collaboration.”

CMS has already held a series of calls and meetings with stakeholders, including patients, consumers, providers, insurers, pharmacies and drugmakers. Members of the public can communicate with CMS officials by emailing them at IRARebateandNegotiation@cms.hhs.gov.

In 2027, negotiated prices for an additional 15 Medicare Part D drugs will take effect. Beginning in 2028, both Part D and Part B drugs will be eligible for negotiation, with negotiated prices for another 15 medications taking effect. Part D drugs are those consumers typically take themselves, while medications paid for under Medicare Part B (which covers doctor visits and other outpatient services) are usually administered in a doctor’s office or other medical facility.

Beginning in 2029 and every year after that, an additional 20 Part D or Part B drugs will be selected to be included in the Medicare negotiation program.