CMS Finalizes Rule Supporting Lasting Medicare Drug Savings

As of November 5, the Centers for Medicare & Medicaid Services’ (CMS) proposed rule to make the Medicare Drug Price Negotiation Program permanent starting in 2029 has been finalized.

Read on to discover what this means for you and your clients.

What Insurance Agents Need to Know

CMS will codify how Medicare drug price negotiation operates long-term. Established under the Inflation Reduction Act of 2022 (IRA), the program has already provided relief for millions of Medicare-eligible seniors across the country.

In its early phases, CMS selected smaller groups of high-cost drugs for price negotiation each year.

Established under the Inflation Reduction Act of 2022 (IRA), the program has already provided relief for millions of Medicare-eligible seniors across the country.

The final rule allows CMS to do the following:

• Select up to 20 additional negotiation-eligible drugs covered under Part D or payable under Part by February 1, 2027
• Consider a drug’s existing maximum fair price (MFP) as part of the factors in renegotiation
• Clarify how withdrawn indication approvals are treated, per the “Working Families Tax Cut” law
• Transition the program from guidance to codified regulations
• Slightly modify the policy used to identify single source drugs for stronger program integrity
• Implement the Temporary Floor for Small Biotech Drugs, limiting CMS from offering or agreeing to a counteroffer for a maximum fair price (MFP) of certain drugs during initial price applicability years 2029 and 2030
• Codify two Medicare Part D policies, including:
  • Formulary inclusion of selected drugs
  • The definition of “negotiated price”

What Does This Mean for Insurance Agents?

As CMS releases future MFPs, it’s essential that you’re aware of which drugs are on these lists to help your clients who may benefit from these reduced prices. You may also see:

• Greater consistency in how high-cost drugs are priced
• More opportunities to help clients understand potential prescription savings
• Continued gradual impact on plan costs and benefits

Check out the latest MFPs here

What This Rule Doesn’t Do

Please be aware that the Medicare Drug Price Negotiation final rule does not:

• Apply to all prescription drugs
• Take effect immediately
• Eliminate differences between Medicare plans

The Medicare Drug Price Negotiation program participates with willing manufacturers, so it’s important to pay attention to who does and doesn’t participate in the program. When MFPs are released, participating manufacturers are listed next to a drug for convenience.

Timeline for the Negotiation Program’s Initial Price Applicability

Over the next few years, CMS will proactively take steps to ensure proper implementation of the new rule. Note the important dates for the program going forward:

Note: These dates are subject to change as per future CMS-related guidance

The Medicare Drug Price Negotiation Program is shifting from a phased rollout to a more permanent fixture. Keep an eye on future updates as the program continues to take shape.

At Ritter, we aim to keep you as up to date as possible with all the relevant insurance-related news. Registering with Ritter for free also gives you access to other resources, tools, and guidance to ensure your business can remain at the top of your clients’ minds!

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