Medicare tweaks rules for second round of drug price talks

The U.S. government is fine-tuning the rules for how it will negotiate drug prices within Medicare when the second round of talks with drugmakers begins early next year.

Specifically, officials at the Centers for Medicare and Medicaid Services plan to offer manufacturers earlier meetings to discuss pricing offers, according to final guidance the agency released Wednesday.

The tweaks also add further opportunities for patients, advocacy groups and caregivers to provide input on their experience with the drugs Medicare selects for negotiation, including a town hall intended to involve practicing physicians.

“Today’s final guidance for the Medicare Drug Price Negotiation Program builds off the success of the first 10 negotiated drug prices,” CMS Administrator Chiquita Brooks-LaSure said in a statement.

Medicare revealed prices for those 10 drugs, which were selected for the initial round of negotiations, in mid-August. The talks were the first time Medicare directly negotiated the price of prescription medicines with their makers, an authority granted by the Inflation Reduction Act.

According to CMS, the negotiated prices were on average between 38% and 79% lower than the medicines’ current U.S. sticker price, which doesn’t account for any rebates or discounts manufacturers previously offered to insurers. In some cases, such as with diabetes therapies selected in the first round, there was extensive rebating that has already resulted in net prices much lower than the drugs’ list cost.

CMS will select the next 15 drugs for price negotiations by Feb. 1. In this second round, drugmakers will have an early opportunity to meet with CMS to discuss the data they submitted for the process. Companies can then meet again with the agency after it makes initial offers, which it must send by June 1. Previously, the first negotiation meeting took place following drugmakers’ submission of their counteroffer.

If CMS rejects a drugmaker’s counteroffer, that company can request up to two more optional meetings before the agency issues its maximum fair price. The new rules also provide for additional opportunities to exchange price information in writing between CMS’ rejection of a drugmaker’s counteroffer and when final offers are due.

During the first round, CMS reached an agreement on prices for five of the selected drugs as a result of these meetings, accepting in four cases the drugmakers’ revised counteroffer. For the remaining five drugs, the associated company accepted CMS’ final written offer, according to a fact sheet the agency put out in August.

The negotiated prices for the first 10 drugs are set to take effect Jan. 1, 2026, whereas the prices CMS negotiates for the next 15 medicines will go into effect Jan. 1, 2027.

CMS also used Wednesday’s guidance to outline how eligible individuals within Medicare and their pharmacies will actually access the negotiated prices in 2026 and 2027. Starting this month, CMS will hold monthly technical calls for pharmacies to describe how this “payment facilitation” will work.

Among the first 10 drugs chosen were the widely used blood thinners Eliquis and Xarelto as well as the heart failure medicine Entresto and the immune disease drugs Enbrel and Stelara. Researchers have used Medicare’s selection criteria to anticipate which 15 drugs the agency might select next, predicting the popular diabetes and weight loss drug Ozempic will make the list.

Only brand-name drugs without generic or biosimilar competition are eligible for selection. Drugs must also have been on the market for either seven or 11 years, depending on whether they are small molecules or biologics, respectively. The pharmaceutical industry has sharply criticized this provision of the process, claiming it will force them to skew their research efforts toward biologics.

Drugmakers also argue that, because Medicare has the power to levy steep fines if they don’t participate, the process is more akin to price-setting than a real negotiation. A number of pharmaceutical companies, as well as the industry’s main trade association, have sued the U.S. government to stop negotiations, but their legal challenges have either been rebuffed or delayed in court.

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