Key Takeaways:

• This morning the Centers for Medicare & Medicaid Services (CMS) published, for the first time, a list of drugs subject to price negotiation under the Inflation Reduction Act’s (IRA) Medicare Drug Price Negotiation program. 
• The list includes 10 drugs with the highest spending in Medicare Part D. 
• The manufacturers responsible for negotiating pricing for these 10 selected drugs, referred to as "Primary Manufacturers," will have until August 1, 2024 to reach an agreement on a “maximum fair price” for their selected drug(s) with CMS. 
• CMS will publish the negotiated price for each selected drug, also known as the "maximum fair price" (MFP), no later than September 1, 2024, which will take effect on January 1, 2026 for Initial Price Applicability Year (IPAY) 2026.

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Selected Drug List for IPAY 2026

• Eliquis® (apixaban)
• Jardiance® (empagliflozin)
• Xarelto® (rivaroxaban)
• Januvia® (sitagliptin)
• Farxiga® (dapagliflozin)
• Entresto® (sacubitril/valsartan)
• Enbrel® (etanercept)
• Imbruvica® (ibrutinib)
• Stelara® (ustekinumab)
• Fiasp (insulin apart injection); Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill

Notable Features of the Selected Drug List

The content of the August 29, 2023 selected drug list was largely anticipated in advance of its publication given the statutory parameters that govern the list's creation. Some notable features about the selected drug list include:

• Part D Drugs Only. All selected drugs are Part D drugs for IPAY 2026 as required by the statute—Part B drugs will not be eligible for selection until IPAY 2028.
• Highest Part D Spend Drugs. The selected drugs are those eligible drugs with the highest total Medicare Part D spend for the 12-month period between June 1, 2022 to May 31, 2023. Total Medicare Part D spend was determined using gross (not net) prices.
• Biosimilar Delay Already Applied. The selected drug list omits any biological products for which a biosimilar manufacturer has submitted a request for a “biosimilar market entry delay,” which requires establishing a high likelihood that the biosimilar would be marketed before September 1, 2025. Biosimilar manufacturers were required to submit such requests by May 22, 2023. According to CMS, zero drugs were excluded from the selected drug list for IPAY 2026 as a result of the biosimilar market entry delay.
• Small Biotech Exception Already Applied. The selected drug list also omits any drugs or biological products that would have qualified for the “small biotech exception.” Manufacturers were required to request the small biotech exception by July 3, 2023. According to CMS, four drugs were determined to be qualified for the small biotech exclusion.

While the August 29, 2023 selected drug list is limited to 10 drugs, the statute progressively increases the number of drugs that will be selected annually for future IPAYs: 15 Medicare Part D drugs for IPAY 2027, 15 Medicare Part D/B drugs for IPAY 2028, and 20 Medicare Part D/B drugs for IPAY 2029 and later years. Importantly, the number of selected drugs is cumulative, meaning that by 2029, there should be approximately 60 (10+15+15+20) selected drugs for which Medicare has negotiated pricing.

Next Steps In The Process

The next step in the process requires Primary Manufacturers to sign a Negotiation Agreement with CMS by October 1, 2023. Primary Manufacturers must also submit specific economic, market, and clinical data for the selected drugs by October 2, 2023. The negotiation process between the Primary Manufacturer and CMS will largely be confidential, but the public will also have an opportunity to submit evidence supporting a selected drug's MFP by October 2, 2023, and CMS will also hold limited patient-focused listening sessions.