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CMS, HHS update Medicare drug price negotiation process
The next Medicare drug price negotiation cycle might see new parameters around the negotiation platform and more talks around patient experience and pharmacy concerns.
HHS and CMS have announced the timeline and procedural changes for the next round of Medicare drug price negotiation efforts. This announcement initiated the second cycle of this process, which seeks to attain lower drug prices for Medicare beneficiaries.
"We are continuing to implement the prescription drug law thoughtfully, prioritizing engagement with all interested parties, and ensuring the process is as transparent and inclusive as possible," Meena Seshamani, M.D., Ph.D., CMS deputy administrator and director of the Center for Medicare, explained in the press release.
The list of drugs that will be in the second round of negotiations will be released by Feb. 1, 2025, as noted in the timeline on the final rule's fact sheet. As many as 15 drugs might be included in this next cycle.
The changes included in the final guidance for the next round of negotiations address issues that arose in the first cycle's negotiation process as well as certain patient-focused events.
Changes in the second cycle of Medicare drug price negotiations
The final rule for the second cycle of Medicare drug price negotiation introduced changes throughout the process, from the timing of the negotiation meetings to the acceptance of pharmacies' feedback on expected cashflow difficulties.
The first drug negotiation meeting will occur between the agency's initial offer and the statutory due date for submitting written counteroffers. This first meeting is optional. It allows the agency and drug manufacturer to begin the conversation around a fair price for the drug with CMS' offer and the evidence for the agency's offer in mind. There might be up to two more negotiation meetings if CMS rejects the manufacturer's counteroffer.
CMS will also allow additional price exchange opportunities, meetings that allow the parties to offer additional offers and counteroffers which will not replace negotiation meetings. These opportunities can occur after CMS rejects a counteroffer. The agency or manufacturer can change their offers and counteroffers before the other party accepts it, but not after.
The agency also tightened its parameters around use of the Medicare Transaction Facilitator Data Module (MTF DM). It put forward requirements regarding data exchange among various parties, including pharmacies, manufacturers and CMS using the platform. The final rule also set up a voluntary payment facilitation capability, which enables the flow of payments from the manufacturer to the pharmacy or dispenser and also creates a system to document refund payments. Also, pharmacies and other dispensers must follow certain rules when reporting on payments made outside of the MTF DM platform.
Certain protections for pharmacies and dispensing entities were introduced in the final rule. Specifically, certain pharmacies with high Medicare Part D prescription volumes or other specified, challenging factors can voice concerns related to cashflow delays at the beginning of the initial price applicability year. In response, manufacturers must now incorporate processes to address cashflow challenges these entities might face during certain portions of the process that delay payments to dispensers.
How the second cycle incorporates Medicare beneficiaries
In addition to lowering costs for beneficiaries, CMS sought to continue integrating patient perspectives into the negotiation process with its second cycle of Medicare drug price negotiations.
CMS will host as many as 15 events in the spring of 2025 that center around beneficiaries' experiences with the drugs that have been chosen for price negotiation. At these roundtable and town hall events, Medicare beneficiaries can provide feedback on these drugs as well as their alternative therapies. Beneficiaries' caregivers and patient advocates are welcome to attend these meetings to offer their perspectives.
In addition to highlighting patient experiences, the conversations at these events will explore whether the selected drugs satisfy underserved clinical needs. Additionally, they will seek to understand the population health outcomes the therapies could have, as applicable.
"As we approach the second cycle of negotiations, we continue to focus on ensuring people with Medicare prescription drug coverage have access to the innovative cures and therapies they need at prices they can afford," Seshamani emphasized.
The agency hosted 10 patient-focused listening sessions during the first cycle, one session for each of the 10 drugs in the negotiations.
Medicare beneficiaries could benefit from the savings on out-of-pocket healthcare costs that result from these negotiations, if the second cycle sees the same success in discounts as the first. They might also see better access to care for the drugs that are a part of the negotiations, since Part D plans might be required to cover the selected drugs, a KFF brief offered.
Outcomes of the first round of negotiations
According to an ASPE report that HHS published in August 2024, the price negotiations on the first 10 drugs led to discounts of 38% to 79%. The first 10 drugs that went through this process addressed pervasive chronic diseases like diabetes, cardiovascular disease, and cancer and, together, accounted for nearly a fifth of Part D gross spending on prescription drugs in 2023. All but one of these drugs were on a trajectory to increase in price over time, with one drug's price increasing 55% between 2018 and 2023.
"Today's final guidance for the Medicare Drug Price Negotiation Program builds off the success of the first 10 negotiated drug prices and continues the Biden-Harris Administration's commitment to provide millions of people with Medicare affordable access to innovative therapies," CMS Administrator Chiquita Brooks-LaSure shared in the press release. "While saving Medicare and taxpayers billions of dollars, the negotiated prices will also provide people with Medicare a better deal on some of Medicare's costliest prescription drugs, promoting necessary competition in the market, and ensuring Medicare is strong today and into the future."
The first cycle did not go without its challenges, however. More specifically, several pharmaceutical companies that participated in the process challenged the rule in 2023. As of August 2024, nine of those lawsuits remain in progress, according to a KFF brief. Of the cases that have been settled, none were ruled in favor of the pharmaceutical companies who brought the challenges.
Kelsey Waddill is a managing editor of Healthcare Payers and multimedia manager at Xtelligent Healthcare. She has covered health insurance news since 2019.
