The Future of Medicare Prescription Drug Price Negotiations

May 29, 2024

The Biden administration this month unveiled new guidance about the future of Medicare’s prescription drug price negotiation program.

The new guidance comes as the federal government and drug manufacturers continue their negotiations as part of round one of price negotiations. The two sides are expected to continue negotiations through the summer. The growth in drug costs has been a concern in health care, with hospitals spending $115 billion on drug expenses during 2023.

“The first cycle of Medicare negotiations continues to proceed, and CMS is committed to transparency and collaboration throughout the Negotiation Program,” said CMS Administrator Chiquita Brooks-LaSure.

Here’s what you need to know:

• First round timeline:  Following negotiations this summer, the initial drug prices will be published during the fall and take effect during 2026.
• Next up:  The second cycle of negotiations could include up to 15 Part D drugs, with prices effective for 2027.
• Key considerations:  The new CMS draft guidance details data sharing processes and steps to ensure access to the negotiated maximum fair price to people with Medicare prescription drug coverage. The agency also is working to address data connections between manufacturers and those dispensing medicines.
• High-cost drugs:  The program focuses on single-source products with no generic alternatives.
  • The first selected products were Eliquis (blood clotting), Jardiance (diabetes), Xarelto (blood clotting), Januvia (diabetes), Farxiga (diabetes), Entresto (heart failure), Enbrel (autoimmune diseases), Imbruvica (blood cancers), Stelara (Crohn’s disease), and NovoLog (diabetes).
  • The drugs accounted for $50.5 billion in total Part D gross covered prescription drug costs between June 1, 2022 and May 31, 2023.
• Quotable:  “CMS understands how important these negotiations are for all parties, and we are focused on fostering dynamic dialogue and continuous engagement with stakeholders,” said Meena Seshaman, CMS deputy administrator, director of the Center for Medicare.

CMS is receiving comments on the draft guidance through July 2. A fact sheet also is available.