Dear USET/USET SPF Family,
Under the Inflation Reduction Act (IRA) of 2022, the Medicare program at the Centers for Medicare and Medicaid Services (CMS), for the first time, may begin directly negotiating the prices of certain high-cost, single-source drugs without generic competition. The provision is intended to lower drug costs for the millions of beneficiaries in Medicare Part D programs. On Tuesday, August 29, 2023, the federal government announced the first 10 medications that are eligible for price negotiation.
The first 10 drugs open for negotiation, listed in this CMS Fact Sheet, accounted for 20% of Part D spending over the last year alone, and represent $3.4 billion in out-of-pocket costs for Medicare beneficiaries. Over the next 4 years, CMS will negotiate prices for 60 drugs covered under Medicare Parts D and B, and up to 20 drugs each year after that.
Provided that a court ruling does not postpone negotiations (as pharmaceutical companies are requesting and hoping for), negotiations between Medicare and the drug companies will begin on October 1, 2023, and conclude on August 1, 2024, with the new negotiated prices going into effect in 2026. Now that CMS has announced the drugs up for negotiation, pharmaceutical companies will have 30 days to decide to participate in the negotiations, face a steep excise tax (between 65 and 95 percent), or withdraw their drugs from Medicare coverage.
CMS has issued extensive guidance on these negotiations. In the near term, drug companies will have until October 2, 2023 to submit information and data on their selected drugs to CMS to opt into the negotiations.
CMS plans to hold public, patient-centered listening sessions, one on each selected drug, between October 30, 2023 and November 15, 2023 for patients and stakeholders to share their input in the negotiation process. These listening sessions are open to the public, but participants are asked to register if they want to make a comment. More information on the listening sessions, including the date and time for each drug-specific session, can be found on this CMS webpage. Registration for these sessions will begin on September 1, 2023.
For more information, please contact Ashton Martin, USET SPF Health Policy Analyst, at amartin@usetinc.org or at 629-736-1433.
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