The Medicare negotiation process for the first 10 Part D drugs selected for Medicare drug price negotiation for initial price applicability year (IPAY) 2026 is well underway. Manufacturers of selected products for Year 1 are in active negotiation discussions with the Centers for Medicare and Medicaid Services (CMS) following the delivery of initial written offers on February 1, 2024. Since the agency rejected all 10 counteroffers, the IPAY 2026 guidance allows for direct meetings with manufacturer through August 1, 2024, with CMS publishing the maximum fair prices (MFPs) for Year 1 products by September 1.

Looking ahead to Year 2, CMS is preparing to release draft negotiation guidance in the coming months, and the agency will announce the list of 15 selected drugs for IPAY 2027 by February 2025.

What’s Next for IPAY 2027 Products?

Ahead of these key milestones, manufacturers anticipating selection for Year 2 should begin preparations as soon as possible. As manufacturers will have just 30 days to submit finalized market data and value dossiers following February 2025 selection, this is the time to launch a series of preparatory activities displayed in Figure 1.

Figure 1. Near-Term Preparation for IPAY 2027

Following assessment of product eligibility and likelihood of IPAY 2027 selection, manufacturers with products expected for selection have four key near-term opportunities:

1. Evaluate the strength of existing evidence and adapt evidence development strategies to better position products for the negotiation process. Manufacturers may have existing dossiers for their products, but it is essential to review their clinical and economic data through the lens of all the factors that CMS is directed to prioritize. It will be critical to pressure test message formulation and value narratives ahead of CMS engagement. The earlier this process is started, the greater the opportunity to influence and address identified evidence gaps.
2. Translate and apply learnings from 2026 selected products and therapeutic areas to prepare for CMS engagement in Year 2. This may begin with refining the organization’s understanding of the expanding role of CMS, as a key influencer in pricing, coverage, and reimbursement in the United States. The MFPs assigned to Year 1 drugs may provide insight into CMS’s overall negotiation philosophy and reveal how close negotiated products’ MFPs landed relative to their statutory ceiling prices and therapeutic alternative prices. Lessons from the first year will set the precedent for future negotiation cycles, allowing manufacturers and competitors of products poised for selection in 2027 and beyond to better prepare for CMS engagement and various downstream MFP implications.
3. Use these learnings to prepare for effective CMS engagement by developing a range of potential MFP scenarios and begin brainstorming possible counteroffer messages that could be deployed in response to an initial MFP offer. Manufacturers should also determine which negotiation elements (e.g., therapeutic alternative selection, clinical value adjustment, manufacturer-specific data) may need additional data bolstering ahead of an asset’s selection for negotiation. Modeling the impact of MFP scenarios to inform forecast planning, incorporating Part D net cost and access strategies, will also provide critical business insights for assets at high risk of negotiation in Year 2 and beyond.
4. Consider opportunities for patient and clinician engagement to help facilitate more patient-centered implementation of Medicare negotiations. In Year 1, CMS allowed for patient listening sessions, but given the newness of CMS’ approach and process, it was challenging for stakeholders to align meaningful feedback with CMS’s focus on therapeutic impact and access considerations. In Year 2, there is significant opportunity for patients, clinicians, and caregivers to more actively engage with CMS in a structured and meaningful manner throughout the process. Manufacturers and other stakeholders should understand what disease- or drug-specific questions are most meaningful to their patient populations and what endpoints, patient-reported outcomes, patient preference data/models, and social impacts could make a meaningful impact in Medicare negotiations.

What Are the Broader Therapeutic Impacts?

In addition to manufacturers facing IPAY 2027 selection, manufacturers in affected therapeutic areas or with a direct competitor to a Year 2 negotiated product will need to undertake comprehensive planning for market impacts. With a couple of exceptions, most drugs that could potentially be negotiated for 2027 are in three key therapeutic areas: diabetes, chronic obstructive pulmonary disease, and cancer.  It is important that manufacturers assess the risk that negotiated competitors pose to their therapies and determine necessary strategies to prepare.

Some of this planning may mirror activities described above for negotiated products. For example, manufacturers facing indirect market impact should consider advancing advocacy plans, simulating potential changes to their Part D access strategy, and strengthening evidence planning to solidify in-market or launch strategies. Looking ahead, manufacturers may also assess and adjust any broader forecasting and longer-term strategic planning informed by the anticipated therapeutic impact. Monitoring coverage and access dynamics for Year 1 drugs and considering CMS’s oversight approach for negotiated vs. non-negotiated drugs can help inform expectations and strategy.

A Trusted Partner for CMS Engagement

An effective Inflation Reduction Act response strategy requires efficient and strategic collaboration at every inflection point. With expertise in policy, market access, and evidence, Avalere’s multidisciplinary experts can effectively prepare a manufacturer for its own or for its competitors’ product negotiation. Connect with us to learn more.