CMS Begins 2nd Cycle of Negotiations
Since its creation by IRA, the federal Inflation Reduction Act of 2022 (P.L. 117-169) , we’ve been reporting on the Medicare Drug Price Negotiation Program being administered by CMS (Centers for Medicare & Medicaid Services). In a nutshell, this Program empowers CMS to negotiate with pharmaceutical companies over the maximum fair price (MFP) for selected drugs.
CMS will be conducting four cycles of negotiations, with the 1st cycle having been completed last year. In the October 2024 Voice, we reported on the MPF for the ten drugs that were negotiated in the 1st cycle and will take effect on January 1, 2026.
Ed Note: Just recently CMS published its explanation for the MFP for each of the ten drugs. It’s expected that savings from the new MFPs for those drugs will generate about $6 billion for taxpayers and $1.5 billion for Medicare enrollees.
Earlier this year, CMS issued the next list of 15 prescription drugs whose MFPs will be negotiated during the 2nd cycle – see table below – and take effect January 1, 2027.
It’s noteworthy that this includes Wegovy and Ozempic, the widely advertised and not surprisingly popular (just turn on your TV) weight loss and diabetes drugs, that have come under scrutiny for their high out-of-pocket (OOP) costs.
At press time, Medicare enrollees still won’t be able to access these drugs for obesity under a federal law that prohibits the program from paying for weight loss treatments. Right now, Medicare will only cover Ozempic and Wegovy when used to treat diabetes or lower blood sugar. Whether a proposal from the Biden Administration, extending their coverage for weight loss , will be implemented, is currently pending before the Trump Administration.
Besides Wegovy and Ozempic, some of the other medications in the 2nd cycle include Trelegy Ellipta, which treats asthma; Otezla, a psoriatic arthritis drug; and several that treat different forms of cancer. It’s been reported that the 25 drugs in both the 1st and 2nd cycles account for a whopping one-third of Medicare spending on prescription drugs.
Not surprisingly, pharmaceutical manufacturers and their trade associations are continuing their challenges against the Program in the courts.
But, so far they have not been successful and therefore, will open a second line of attack with the Trump administration and Congress. If and when the need arises, we will support AARP and other Program advocates in fighting against the industry’s attempts to kill or otherwise undermine the Program.
In the meantime, CMS is proceeding forward with the 2nd cycle of negotiations that will conclude with the new MFPs for the 15 drugs becoming effective on January 1, 2027.
