Photograph of hundred dollar bills and a shopping cart full of prescription drugs

The landscape of Medicare is undergoing a transformative change, driven by the Inflation Reduction Act of 2022 and the Centers for Medicare & Medicaid Services (CMS) taking bold steps to negotiate prescription drug prices directly. This monumental shift is poised to impact the healthcare industry significantly in the coming years.

CMS Takes the Lead in Drug Price Negotiations

In a historic move, CMS announced the first ten drugs covered under Medicare Part D that will undergo negotiations with participating drug companies. These negotiations, set to occur in 2023 and 2024, aim to reduce drug prices, improve access, and enhance affordability for Medicare beneficiaries. The negotiated prices are scheduled to become effective in 2026. This initiative directly responds to the $3.4 billion in out-of-pocket costs seniors bore in 2022 for these specific drugs, which had no generic or biosimilar competition.

So, what can we expect in the coming years, and how might these changes affect health plans?

  1. The Negotiation Process (Next 1-2 Years): As we move through 2023 and into 2024, the negotiation process will be in full swing. CMS will send initial offers of maximum fair prices to participating drug companies by February 1, 2024. Participating companies will have the opportunity to accept these offers or propose counteroffers. Negotiation meetings may occur if counteroffers are made. The aim is to conclude negotiations by August 1, 2024.
  2. Implementation of Negotiated Prices (Next 2-3 Years): After the negotiation period concludes, CMS will publish any agreed upon negotiated prices for the selected drugs by September 1, 2024. These prices will become effective on January 1, 2026. The lower costs for high-spend drugs will undoubtedly benefit Medicare beneficiaries.
  3. Expanding the List (Next 3-5 Years): Beyond the initial ten drugs, CMS plans to expand the list of drugs subject to negotiation. It is anticipated that 15 more drugs will be named for negotiation in 2024 and 2025. This expansion will further enhance the impact of the program.
  4. Impact on Health Plans: Health plans, particularly those serving Medicare beneficiaries, will need to adapt to these changes. The negotiation program can lead to lower drug costs for beneficiaries, potentially reducing the overall cost of healthcare. Health plans may need to adjust their pricing structures and benefit designs accordingly to remain competitive and attractive to members.
  5. Public Engagement: Public feedback plays a crucial role in the success of the Negotiation Program. CMS actively sought input through a serious of listening sessions from various stakeholders, including patients, beneficiaries, caregivers, and advocacy organizations. During these sessions, the public had opportunities to share insights on therapeutic alternatives, unmet medical needs, and the impact of selected drugs on specific populations. Learn more.

The CMS drug price negotiation program represents a significant step towards addressing the rising costs of prescription drugs and improving access to essential medications for Medicare beneficiaries. Over the next 1-5 years, we anticipate an ongoing expansion of the program and a favorable impact on out-of-pocket expenses for seniors. Health plans should vigilantly track these developments and adapt their strategies to ensure they can offer cost-effective coverage to their members. This initiative signals a steadfast commitment to enhancing the healthcare landscape, with its ultimate success poised to benefit millions of Americans.

Eviti Connect Infographic

Eviti Connect Infographic: What Payers Need to Know About the Oncology Drug Shortage in the U.S.

What Payers Need to Know About the Oncology Drug Shortage in the U.S.

This infographic describes why there is a drug shortage, which drugs are impacted, and how Eviti Connect can help alleviate the burden.


NantHealth | Technology that Simplifies Healthcare.