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The Biden administration released updated details Friday on how Medicare will negotiate prescription drug prices directly with drug companies under a new program.
The Centers for Medicare and Medicaid Services (CMS) unveiled revised guidance for the Medicare Drug Price Negotiation Program, which was created in the 2022 Inflation Reduction Act to make the government health plan’s covered medications more affordable. The move put CMS one step closer to starting Medicare drug price negotiations this fall.
CMS Administrator Chiquita Brooks-LaSure said in a statement that the program will help her agency “protect the health of people with Medicare by ensuring they can afford the prescription drugs they need.” The negotiated prices will take effect in 2026.
“Negotiating with manufacturers on drug prices will improve access to lifesaving drugs for millions of people with Medicare while driving market competition and scientific innovation,” she added.
The latest guidance offered new insights on how Medicare intends to use its new ability to negotiate directly with Medicare-participating drug companies for lower prices on covered, high-cost Medicare Part B and Part D drugs that don’t have generic or biosimilar alternatives. CMS will look at a drug’s clinical benefit and whether it fills an unmet need, as well as associated costs and other considerations.
The update came three months after CMS issued its initial guidance, which drew 7,500+ public comments and a growing number of lawsuits. The revised guidance contains modifications to improve transparency and the negotiation process, according to CMS. It includes clarifications on how CMS will identify selected drugs along with the inclusion of new opportunities for drug companies and the public to engage with during negotiations on certain drugs.
“Public feedback, both through seeking comments on the initial guidance and extensive engagement, has been instrumental in our policymaking and implementation efforts to date,” CMS Deputy Administrator and Director of the Center for Medicare Meena Seshamani said in a statement. “We look forward to ongoing collaboration and engagement with all interested parties on the Negotiation Program and other provisions of the drug law as we continue our thoughtful implementation.”
CMS will publish the first 10 drugs for 2026 negotiations by Sept. 1. The maximum fair prices negotiated for those medications will be announced by Sept. 1, 2024, and take effect Jan. 1, 2026. The agency will select up to 15 additional drugs for 2027 negotiations, 15 more drugs for 2028, and 20 drugs for each following year.