Listening Sessions on Drug Price Negotiations Will Be Live Streamed and Opened to the Public This Fall
In this Alert, we provide an update regarding the first 10 drugs for Medicare price negotiation selected under the provisions of the Inflation Reduction Act of 2022 (IRA).1 This is an update to two previously published Alerts providing a detailed overview of the IRA: “Prescription Drug Provisions in the Inflation Reduction Act of 2022” and “CMS Proceeds Full Steam Ahead with Medicare Drug Price Negotiation Program.”
10 Medicare Part D Drugs Selected for Negotiation for Price Applicability Year 2026
The IRA was signed into law in August 2022 and includes provisions allowing the U.S. Department of Health and Human Services (HHS) to negotiate prices for certain high-cost Medicare covered drugs (including small molecule drugs and biologics). As required by the IRA, HHS through the Centers for Medicare & Medicaid Services (CMS) has put forth a list of 10 drugs, covered under Medicare Part D, selected for negotiation for initial price applicability year 2026. The 10 selected drugs for price applicable year 2026 are Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Fiasp/NovoLo.2 Notably, the kinds of products selected by CMS range considerably: Eliquis, for example, is an extremely common medication (a blood thinner for which Medicare paid about $4,000 each patient). The list also includes narrowly focused, extremely expensive drugs such as Imbruvica (used by about 26,000 patients in 2021 at an annual price of $121,000 per patient) for treatment of blood cancers.
Table 1. 10 selected drugs for price applicable year 20263
According to CMS, the 10 above listed drugs were selected under the IRA’s framework and had “the highest total [Medicare] Part D gross covered prescription drug costs after excluding from the ranked list of 50 negotiation-eligible drugs any biologics that qualify for delayed selection as a result of there being a high likelihood that a biosimilar will enter the market within a specified time.”4 CMS further reported that during the one-year time period scrutinized (June 1, 2022 and May 31, 2023), these 10 selected drugs accounted for $50.5 billion in expenses.5 Further, of the 3,500 different drug products reimbursed by Medicare Part D, the 10 selected drugs accounted for approximately 20 percent of Medicare Part D program annual spending.6
Negotiating a Maximum Fair Price
Now that the first 10 drugs are selected, manufacturers and HHS will negotiate under the framework set forth by the IRA. During the negotiation period, manufacturers will be required to submit certain information to HHS no later than October 2, 2023, including R&D costs, costs of production and distribution of the selected drug, prior federal financing support, data on pending and approved patent applications and FDA approvals and exclusivities, market data, revenue, sales volume, and alternative treatments. Through the negotiation framework of the IRA, a maximum fair price that a selected drug may be sold for by pharmacies dispensing the drug under Medicare Part D will be determined. If parties cannot agree on a maximum fair price through the initial offer or counteroffer, CMS will invite each manufacturer for up to three negotiation meetings during Spring and Summer 2024 before the negotiation period ends on August 1, 2024.7 By March 2025, CMS is expected to publish an explanation of the maximum fair prices that have been negotiated for drugs selected for negotiation for 2026.8
If manufacturers of selected drugs do not negotiate with HHS, such manufacturers are subject to an excise tax on sales of the drug during the noncompliance period. This tax starts at 65 percent of the U.S. sales of drug, increasing by 10 percent every quarter up to 95 percent. However, the excise tax can be suspended if manufacturers choose to have their drugs not covered by Medicare or Medicaid. Such a decision could significantly impact the market size and related sales for the selected drug.
HHS Timeline
The 10 drugs listed in Table 1 are the first provided by CMS, with more to follow in the coming years. The IRA details a timeline for when HHS will select drugs for drug price negotiations. This timeline is detailed in Table 2 below. In addition to the 10 drugs selected for price applicable year 2026, HHS will select 15 Medicare Part D drugs for 2027, 15 Medicare Part B or Part D drugs for 2028, and 20 Medicare Part B or Part D drugs for 2029 and subsequent years.
Table 2. Timeline for HHS select drugs for drug price negotiation
Engagement
CMS has emphasized opportunities for public engagement in the drug price negotiation process, starting with meetings between CMS officials and individual manufacturers with a selected drug to discuss data submissions and continuing with patient-focused listening sessions. These listening sessions will be live streamed and open to the public. CMS explains that the open listening sessions will provide opportunities for patients, beneficiaries, caregivers, consumer and patient organizations and, and other interested parties to share patient-focused input on the selected drugs, the medical needs that they address, the populations who rely on them, and the availability of therapeutic alternatives.9 Additional details about these public listening sessions are listed in Table 3 below.
Table 3. Listening Sessions for selected drugs10
Challenges to the IRA
Since the IRA was signed into law, multiple lawsuits have been filed by pharmaceutical companies and trade groups against HHS challenging the validity of the IRA drug negotiations provisions. Among other arguments, challengers have contended that the IRA negotiation and tax penalty provisions violate the First, Fifth, and Eighth Amendments of the United States Constitution. Companies and other stakeholders have used similar arguments in the past to push back on a broad range of HHS policies and initiatives in recent decades.
CMS must tread carefully in the new territory of drug price negotiations. Aside from predictable corporate pushback, a pressing concern is the possibility that lowering the price for certain drugs may cause manufacturers to react in a manner that would increase drug prices prior to meeting the selection criteria for IRA price negotiation or limit access to new and innovative drugs. The agency can be expected to pay especially close attention to any input that it receives from patients and other stakeholders about the accessibility of effective drugs during the public meetings.
We will continue to monitor these developments as the IRA and its implementation may change over time.
For questions regarding this alert and FDA and healthcare regulatory strategies for drugs, biologics, and other FDA-regulated products, please contact any member of Wilson Sonsini's FDA regulatory, healthcare, and consumer products practice. For questions regarding patent strategies, please contact any member of Wilson Sonsini's patents and innovations practice.
[1] Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2026, available at https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf.
[2] Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2026, available at https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf.
[3] Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2026, available at https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf.
[4] Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2026, available at https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf.
[5] Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2026, available at https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf.
[6] Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2026, available at https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf.
[7] Medicare Drug Price Negotiation Program: Selected Drugs for Initial Price Applicability Year 2026, available at https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf.
[8] CMS, Fact Sheet: Medicare Drug Price Negotiation Program Revised Guidance, available at https://www.cms.gov/files/document/fact-sheetrevised-drug-price-negotiation-program-guidance-june-2023.pdf.
[9] Medicare Drug Price Negotiation Program Patient-Focused Listening Sessions, available at https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation-program-patient-focused-listening-sessions.
[10] Medicare Drug Price Negotiation Program Patient-Focused Listening Sessions, available at https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation-program-patient-focused-listening-sessions.
