CMS Proposes Permanent Drug Price Negotiation Framework

A new proposal from the Centers for Medicare & Medicaid Services would establish a permanent framework for the Medicare Drug Price Negotiation Program, creating a more transparent and sustainable process for lowering drug costs for millions of Medicare beneficiaries. The proposed rule would also create greater long-term certainty for drug manufacturers that participate in negotiations. It includes policies for negotiating and renegotiating high-cost, single-source drugs beginning with initial price applicability year 2029, while continuing to support innovation and strengthen the program. "This proposed rule lowers drug prices for seniors and ensures continued savings," said CMS Administrator Dr. Mehmet Oz. "We are moving from annual updates to a permanent, predictable framework. This approach puts patients first, strengthens Medicare, and protects the innovation pipeline that delivers future cures." CMS will select up to 20 additional negotiation-eligible drugs covered under Part D and/or payable under Part B for this fourth cycle of negotiations and subsequent cycles of the Negotiation Program. As required by law, the Negotiation Program must also transition from being implemented through guidance to being codified in regulations as a durable, long-term framework. This rule also would create certain new policies for the Negotiation Program and the Medicare Prescription Drug Benefit Program. The rule also proposes a narrow modification of the policy used to identify qualifying single source drugs to address potential program integrity concerns posed by certain new formulations. In addition to codifying the existing program, CMS is proposing to implement the Temporary Floor for Small Biotech Drugs, as required by law, which limits CMS from offering or agreeing to a counteroffer for a maximum fair price for Small Biotech Drugs below the floor for certain eligible drugs during initial price applicability years 2029 and 2030. Publicly traded companies in the space include AstraZeneca (AZN), Bristol Myers (BMY), Eli Lilly (LLY), GSK (GSK), Johnson & Johnson (JNJ), Merck (MRK), Novartis (NVS), Pfizer (PFE), Roche (RHHBY) and Sanofi (SNY).