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CMS Issues Initial Guidance Regarding the Medicare Drug Price Negotiation Program

As part of the Inflation Reduction Act (IRA) of 2022, the Centers for Medicare & Medicaid Services (CMS) is required to establish the Medicare Drug Price Negotiation Program (Negotiation Program) to negotiate maximum fair prices (MFPs) for certain high expenditure, single source drugs and biologicals. In accordance with the IRA’s requirements, CMS recently issued an initial guidance memorandum for implementation of the Negotiation Program for initial price applicability year 2026, as well as solicitation of comments.

The initial guidance memorandum describes how CMS intends to implement the Negotiation Program for initial price applicability year 2026 (January 1, 2026 to December 31, 2026), and specifies the requirements that will be applicable to manufacturers of Medicare Part D drugs that are selected for negotiation and the procedures that may be applicable to manufacturers of Medicare Part D drugs, Medicare Part D plans (both Prescription Drug Plans (PDPs) and Medicare Advantage Drug Plans (MA-PDs)), and providers and suppliers (including retail pharmacies) that furnish Medicare Part D drugs.

Additionally, the IRA creates several new sections under the Social Security Act (Act) to administer and govern the Negotiation Program. Specifically, in accordance with the IRA and the newly created provisions under the Act, CMS’ initial guidance provides that with respect to each initial price applicability year, CMS shall:

  • Publish a list of selected drugs;
  • Enter into agreements with manufacturers of selected drugs;
  • Negotiate and, if applicable, renegotiate MFPs for such selected drugs;
  • Publish MFPs for selected drugs;
  • Carry out administrative duties and compliance monitoring; and
  • Enforce civil monetary penalties (CMPs).

CMS is voluntarily soliciting public comment on certain parts of its initial guidance memorandum. Interested providers and stakeholders have until April 14, 2023 to submit their comments for consideration by CMS. CMS has stated that it will issue revised guidance for initial price applicability year 2026 after considering the public comments received in response to the initial guidance.

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