CMS Issues Explanations for the MFPs for the Medicare Drug Price Negotiation Program, Reminders Related to the Medicare Prescription Payment Plan, and Revised Final Guidance for the Manufacturer Discount Program

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Legislation & Regulation
CMS Issues Explanations for the MFPs for the Medicare Drug Price Negotiation Program, Reminders Related to the Medicare Prescription Payment Plan, and Revised Final Guidance for the Manufacturer Discount Program
  • On December 20, 2024, the Centers for Medicare & Medicaid Services (CMS) issued:
    • explanations for the maximum fair prices (MFPs) for the drugs selected for the IRA’s Medicare Drug Price Negotiation Program for the initial price applicability year (IPAY) 2026.
    • Reminders Related to the Medicare Prescription Payment Plan.
    • Revised Final Guidance of the Medicare Part D Manufacturer Discount Program.
  • See the following summaries for each of these topics. 
Explanations for the Maximum Fair Prices (MFPs) for the Drugs Selected for the IRA’s Medicare Drug Price Negotiation Program 
  • CMS’ explanations are very similar across products, describing the agency’s overall process for reviewing data and assessing the selected drug without providing in-depth commentary on the selected drug. 
  • CMS does not explain how they weighed different factors and whether such factors adjusted the agency’s offers upward or downward. CMS did reveal information regarding the agency’s position on therapeutic alternatives, which may be instructive for future negotiations. 
  • The explanations include, for each drug: 
    • The list of indications CMS reviewed for the selected drug. 
    • The list of therapeutic alternatives, by indication, that CMS states it considered “were particularly relevant” to the selected drug. 
    • The list of key efficacy and safety outcomes, by indication, that CMS used for comparing the selected drug with its therapeutic alternatives.
    • A list of citations that the agency considered “representative of evidence that CMS reviewed during the negotiation process, including citations provided by the Primary Manufacturer and the public.” 
    • A high-level summary of the timeframe for the negotiation for the selected drug. 
    • High-level summaries of the negotiation meetings between the agency and manufacturer, including agency attendees but redacting manufacturer attendees and any information on offers and counteroffers. 
  • CMS also published the full set of information submitted by a given manufacturer, as well as other outside entities (e.g., patients, advocacy groups), with substantial redactions, e.g., financial and pricing data. Significant parts of manufacturers’ narratives and information submitted by outside entities are not redacted and can therefore provide context on what was submitted to CMS. The agency notes the following facts about the negotiation process across the manufacturers of all ten selected drugs: 
    • CMS declined every manufacturer’s counteroffer. CMS held three negotiation meetings with every manufacturer, some of which included discussion of “additional proposals for an MFP.” 
    • Between CMS and the manufacturers, more than 50 offers were exchanged across all ten manufacturers, not including the ten initial offers CMS made and the ten written counteroffers provided by the manufacturers. 
    • CMS revised its initial offer for each selected drug upwards at least once. 
    • In six of the ten negotiations, CMS moved more than the manufacturer between the initial offer and final agreement; the manufacturer moved more in four of the ten negotiations. 
    • For five of the selected drugs, a final price was reached “in association with a negotiation meeting,” with four such cases involving CMS accepting a counteroffer from the manufacturer. In the other five cases, the manufacturer accepted CMS’ final counteroffer, “on or before” the statutory deadline. 
    • See the files linked at the end of this NewsBREAK for more information. 
Reminders Related to the Medicare Prescription Payment Plan 
  • CMS issued reminders to Part D plan sponsors and other interested parties about the Medicare Prescription Payment Plan, in advance of its implementation on January 1, 2025. 
  • Under this Plan, Part D plan sponsors must provide all Part D enrollees with the option to pay out-of-pocket (OOP) prescription drug costs in monthly amounts over the plan year instead of at the point of sale (POS).
  • Starting January 1, 2025, Part D plan sponsors must submit beneficiary-level data through the Medicare Advantage Prescription Drug (MARx) System via a MARx Batch Input Transaction Data File. CMS encourages daily submission of data. Independent data validation for these new reporting requirements is not required. 
  • CMS does not expect Part D plans that charge $0 cost-sharing for covered drugs for all enrollees to allow them to pay their out-of-pocket (OOP) expenses in monthly installments over the plan year. Furthermore, these plans are not required to adhere to the final guidance from either Part One or Part Two. 
  • CMS is now requiring Part D sponsors to provide information on the Low-Income Subsidy (LIS) program as part of their Medicare Prescription Payment Plan materials. Part D plan sponsors are to also include general information about the LIS program on Medicare Prescription Payment Plan billing statements on their websites. 
  • Part D plan sponsors and pharmacies must use a Bank Identification Number (BIN) and Processor Control Number (PCN) electronic claims processing methodology for applicable Medicare Prescription Payment Plan transactions. 
  • CMS is also correcting the HPMS memo, “Technical Memorandum on the Changes to True Out-of-Pocket (TrOOP) Costs and the Calculation of the Maximum Monthly Cap for the Medicare Prescription Payment Plan,” which was released on April 25, 2024, by updating the table accompanying Example #2. The table incorrectly included OOP costs incurred for the month of June, when the example participant would have already reached the $2,000 annual OOP threshold. 

Revised Final Guidance of Medicare Part D Manufacturer Discount Program

  • The Revised Final Guidance replaces the Medicare Part D Manufacturer Discount Program Final Guidance that CMS released on November 17, 2023. 
  • The Revised Final Guidance includes clarifications to sections 100.1.1 and 100.1.2 regarding manufacturer initial disputes and independent review. 

More on these topics: MFPs 

Medicare Prescription Payment Plan 

Manufacturer Discount Program 

For questions, please reach out to Vicky Jucelin.

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