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LUGPA Policy Update - CMS Releases Guidance for Second Round of Medicare Drug Price Negotiation Program

On October 2, 2024, the Centers for Medicare & Medicaid Services (CMS) released final guidance for the second phase of the Medicare Drug Price Negotiation Program. This initiative, established under the Inflation Reduction Act, aims to lower medication costs for Medicare beneficiaries by negotiating directly with drug manufacturers. The program represents a significant shift in how Medicare approaches drug pricing, focusing on reducing out-of-pocket costs and improving affordability for beneficiaries.

Key Points:

  1. Program Expansion and Cost Savings: CMS successfully completed the first round of drug price negotiations in August 2024, focusing on ten high-cost medications. The new negotiated prices for these drugs will take effect on January 1, 2026, and are projected to save Medicare beneficiaries about $1.5 billion in out-of-pocket expenses in that year alone. The second round of negotiations will involve up to 15 additional drugs. CMS will announce the drugs selected for this round by February 1, 2025, and the new prices will take effect on January 1, 2027.
  1. Role of the Medicare Transaction Facilitator: To streamline the program and ensure smooth implementation, CMS will engage a Medicare Transaction Facilitator. This role is crucial for managing data exchange among stakeholders, such as Medicare, pharmacies, and drug manufacturers. The facilitator will also provide optional payment assistance services, which will help ensure that Medicare beneficiaries can easily access the lower, negotiated prices at pharmacies. While participation by drug manufacturers in this payment facilitation process is voluntary, it adds another layer of efficiency to the program, potentially speeding up access to reduced prices for beneficiaries.
  1. Negotiation Process Updates: Building on lessons learned from the first negotiation cycle, CMS will continue using the same basic negotiation process but with some improvements. Updates will allow for more flexibility, including additional offers and counteroffers between CMS and drug manufacturers. This enhanced process aims to create more dynamic negotiations, helping CMS secure better pricing agreements while allowing drugmakers to refine their pricing offers.
  2. Patient and Stakeholder Engagement: As part of the second round of negotiations, CMS will hold up to 15 patient-focused roundtables and a town hall meeting in Spring 2025. These sessions will gather input from patients and other stakeholders on the clinical aspects of the selected drugs, providing valuable insights that will help inform the negotiations. By including patients' voices, CMS aims to ensure that the drugs chosen for negotiation not only provide financial relief but also effectively meet clinical needs.
  3. Operational Guidance for Stakeholders: The final guidance also outlines the responsibilities for drug manufacturers, Medicare Part D plans, pharmacies, and mail-order services in adhering to the negotiated pricing requirements starting in 2026. This includes ensuring that beneficiaries are charged the correct prices and that pharmacies can implement the new pricing seamlessly. Additionally, CMS will host regular technical calls to support pharmacies and provide guidance on operational issues, similar to the support already provided to Part D plans and drug manufacturers. These technical calls are designed to address any program implementation challenges and ensure stakeholders are well-prepared for the changes.

Implications for LUGPA Members:

For LUGPA members, the expansion of the Medicare Drug Price Negotiation Program has several potential impacts. First, practices may see changes in the cost structure for medications frequently prescribed to their patients. This could influence reimbursement rates, particularly if high-cost specialty drugs are included in the second round of negotiations. Practices may need to adjust to new pricing models and should stay informed about the drugs selected for negotiation in 2025.

Additionally, the program could affect how urologists manage patient care, particularly for those who rely on expensive therapies. Including patient perspectives in the negotiation process is a promising development, aligning with LUGPA's focus on patient-centered care. However, due to the new pricing agreements, practices may need to be prepared for potential changes in medication access or formulary adjustments.

LUGPA will continue to track developments related to this program and keep members updated. For further details, including access to the complete guidance and press releases, see the links below: