The Inflation Reduction Act (IRA) is bringing landmark policy changes to the healthcare industry, raising important questions about drug pricing, plan economics, and patient impacts. In this series, the IRA Question of the Week, Avalere answers the pressing questions shaping healthcare stakeholders’ strategic decision-making as the IRA is implemented.

In this installment, Avalere experts discuss comments CMS received on the initial negotiation guidance and various revisions CMS made in response to those comments.

Background

On March 15, CMS issued initial guidance providing key operational details on the Medicare Drug Price Negotiation Program for price applicability year 2026. The guidance detailed and sought feedback on drug selection processes, data submission requirements, offer and counteroffer requirements, and manufacturer compliance requirements.

Comments and Changes

In late July, CMS posted the 181 individual public comments it received on the initial guidance to its website. Submissions came from a variety of stakeholders (see Figure 1) and ranged from one-page statements of support to detailed, 70-page explanations of the commenter’s perspective.

Source: *Other includes consultants, think tanks, and political advocacy organizations among various stakeholders.

In response to stakeholder comments, CMS made important changes to the initial guidance in the June 30 revised guidance. These changes focused on:

• Use of a Medicare Transaction Facilitator (MTF): Several commenters urged CMS to clarify how it will operationalize the maximum fair price (MFP) provision. In the revised guidance, the agency stated that it intends to engage an MTF to help effectuate access to the MFP through a retrospective refund model. The MTF will facilitate the exchange of data between supply chain entities to verify the MFP eligibility so that the MFP can be effectively passed through by manufacturers to pharmacies, mail order services, and other dispensers.
• Disclosure of Negotiation Information: In the initial guidance, CMS proposed prohibiting manufacturers from publicly disclosing any details about the negotiation process. Many commenters opposed this, stating that the negotiation process should be more transparent than originally proposed. In the revised guidance, CMS stated that manufacturers may disclose any information they choose, but that information will no longer be considered proprietary. Additionally, CMS will not publicly discuss ongoing negotiations unless a manufacturer chooses to disclose those details. While CMS will prohibit audio and video recording of meetings, manufacturers may maintain written records of exchanges with the agency.
• Patient and Caregiver Engagement: Many commenters argued that the process proposed in the initial guidance did not sufficiently incorporate patient input. In response, CMS added patient-focused listening sessions to the negotiation process. These sessions will occur after manufacturer data submission, but CMS did not provide a date for them. Additionally, CMS added a question specifically for patients and caregivers to the Negotiation Data Elements Information Collection Request asking respondents to describe their experiences surrounding the selected drug or its therapeutic alternatives. CMS seeks to understand treatment duration, health impact, symptom improvement, side effects, quality of life, and access challenges in the negotiation process.
• Part D Formulary Management of Selected Products: Many commenters expressed concern that plans would provide preferential tier placement to non-negotiated drugs compared to negotiated competitors. In response, CMS said that it will not implement explicit tier placement or utilization management requirements for drugs selected for negotiation. The agency will, however, use the formulary review process to evaluate instances in which Part D plan sponsors:
  • Place negotiated drugs on non-preferred tiers
  • Place negotiated drugs on higher tiers than non-negotiated drugs in the same class
  • Subject negotiated drugs to more restrictive utilization management compared to non-selected drugs in the same class, including step therapy through a non-negotiated drug

CMS expects plan sponsors to provide a “reasonable justification” of any disparate treatment of negotiated drugs. The justification should rely on clinical factors and compliance with plan design statutory and regulatory requirements.

Dive Deeper

Following the revised guidance, many uncertainties remain around negotiation, including how MFP will be operationalized, how CMS will identify therapeutic alternatives for selected drugs, and how CMS will weigh different data it receives. Stakeholders can engage with CMS through individual or group meetings, ICR submissions, and patient-focused listening sessions.

Avalere’s experts in Medicare, drug pricing, and IRA implementation are supporting healthcare stakeholders in engagement with one another and with CMS to shape the negotiation and MFP operationalization processes. To learn how we can help you develop and deliver effective messaging on these processes and other IRA changes, connect with us.