CMS proposes establishing permanent framework for Medicare drug price negotiations
The Centers for Medicare & Medicaid Services (CMS) is looking to standardize the Medicare drug price negotiation process, which currently has some variation year-to-year, as the included pharmaceuticals are chosen by officials at CMS.
What President Donald Trump’s administration is proposing, under the authority of CMS Administrator Mehmet Oz, MD, is creating a framework that formally outlines how drugs are selected, when and how negotiations occur, and what rules guide the final decision-making of what a maximum fair price should be in terms of reimbursement for prescriptions.
CMS has put forth a proposed rule for the guidelines, arguing in a press release that it will lead to a more transparent and sustainable process for lowering drug costs for millions of Medicare beneficiaries.
The agency added that its proposal, should it be finalized and published to the Federal Register, would impact negotiations that set prices for 2029. Certain safeguards established by Congress as part of the 2022 Inflation Reduction Act—from which the Medicare drug price negotiation program originates—would remain in place, including protections for small drug makers whose business relies on their ability to sell a select number of products at full prices.
The proposal from CMS also outlines how the agency will tackle re-negotiations for substances that are deemed to be high-cost, such as those from small drug companies or pharmaceuticals that are patented by a single entity.
“This proposed rule lowers drug prices for seniors and ensures continued savings,” Oz said in the news release. “We are moving from annual updates to a permanent, predictable framework. This approach puts patients first, strengthens Medicare and protects the innovation pipeline that delivers future cures.”
The agency stated that its goal is to give pharmaceutical companies, providers and Medicare Part D plans more predictable rules, so the shifting prices that result from rounds of negotiations won’t ever come as a surprise.
More drugs, bigger savings
For the kickoff of the new standardized negotiation program, CMS said it will select “up to 20” additional drugs for inclusion in the 2029 and 2030 applicability years, all of which will be medications eligible for coverage under Medicare Part D and Part B.
To date, CMS has successfully set negotiated prices for 25 drugs in the two years the program has been active. The agency said this has generated millions of dollars in savings for both the program and Medicare beneficiaries.
“The program is already delivering real savings,” Chris Klomp, Director of Medicare and Chief Counselor of the U.S. Department of Health and Human Services, said. “This rule builds on that foundation by establishing clear, consistent rules of the road—giving patients, plans, pharmacies, and drug manufacturers the certainty they need as we continue to drive down costs.”
If successful, the proposed rule would impact the fourth round of price negotiations, set to begin next year.
The agency’s fact sheet that outlines its proposal can be found by clicking here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.