CMS Proposes to Make Medicare Drug Price Negotiation Program Permanent by 2029

On June 12, CMS announced a proposed rule to formalize and extend the Medicare Drug Price Negotiation Program starting in 2029 and beyond.

Currently implemented through temporary guidance, the program would transition to a permanent regulatory structure under this rule.

What Insurance Agents Need to Know

In the new proposal, CMS seeks to 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 new rule proposes the following:

• Selecting up to 20 additional negotiation-eligible drugs covered under Part D or payable under Part B for 2029 and each year beyond
• Transitioning the program from guidance to codified regulations
• Slightly modifying the policy used to identify single source drugs for stronger program integrity
• Implementing the Temporary Floor for Small Biotech Drugs, limiting CMS form offering or agreeing to a counteroffer for a maximum fair price (MFP) of certain drugs during initial price applicability years 2029 and 2030
• Codifying 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 CMS’ latest Medicare proposed rule does not:

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

The Medicare Drug Price Negotiation program is volunteer based, 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

As CMS moves toward finalizing this rule, the Medicare Drug Price Negotiation Program is shifting from a phased rollout to a more permanent fixture. Agents should keep an eye on future updates as the program continues to take shape.

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