On July 2, 2024, the Centers for Medicare & Medicaid Services (CMS) issued an information collection request (ICR) seeking comment on the cost burden of two components of the Medicare Drug Price Negotiation Program (the Program) for Initial Price Applicability Year 2027 (IPAY 2027): the Negotiation Data Elements and the Drug Price Negotiation Process.
As discussed in a prior update, CMS announced earlier this year that it would seek public input on key aspects of its implementation of the Inflation Reduction Act (IRA), including its guidance for the Program. CMS issued its Initial Memorandum on the implementation of the Program on March 15, 2023. This ICR follows CMS’ recent publication of Draft Guidance on the Program, issued on May 3, 2024.
Stakeholders are invited to submit comments regarding CMS’ estimates of the cost burden of collecting this information, including the necessity and utility of the proposed information collection for the proper performance of the agency’s functions; the accuracy of the estimated burden; ways to enhance the quality, utility, and clarity of the information to be collected; and the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Negotiation Data Elements
The IRA requires that CMS consider certain data from Primary Manufacturers (the manufacturer that holds the new drug application (NDA) or biologics license application (BLA) for the drug selected for negotiation under the Program) as part of the price negotiation process, including when determining offers and counteroffers. CMS has stated its intent to implement the offer and counteroffer process with the goal of negotiating to achieve agreement on the lowest maximum fair price (MFP) for each selected drug. Primary Manufacturers of selected drugs for 2027 are required to report the following data to CMS via the Health Plan Management System (HPMS) by March 1, 2025:
- Research and development (R&D) costs of the Primary Manufacturer for the selected drug and the extent to which the Primary Manufacturer has recouped those costs
- Current unit costs of production and distribution of the selected drug, averaged across the Primary Manufacturer and any Secondary Manufacturer(s)
- Prior federal financial support for novel therapeutic discovery and development with respect to the selected drug
- Data on pending and approved patent applications, exclusivities recognized by the Food and Drug Administration (FDA), and applications and approvals under Section 505(c) of the Food, Drug, & Cosmetic Act or Section 351(a) of the Public Health Service Act for the selected drug
- Market data and revenue and sales volume data for the selected drug in the United States for the Primary Manufacturer and any Secondary Manufacturer(s)
CMS must also consider data on alternative treatments, as available, with respect to each selected drug. Such data may be submitted by any interested party, including Primary and Secondary Manufacturers, Medicare beneficiaries, academic experts, and patient organizations. CMS will consider the following factors with respect to this data:
- The extent to which the selected drug represents a therapeutic advance compared to existing therapeutic alternatives for the selected drug and the costs of such existing therapeutic alternatives
- Prescribing information in the FDA-approved labeling for the selected drug and for its therapeutic alternatives, if available
- Comparative effectiveness of the selected drug and its therapeutic alternatives, including the effects of the selected drug and its therapeutic alternatives on specific populations (including individuals with disabilities, the elderly, the terminally ill, and children)
- The extent to which the selected drug and therapeutic alternatives to the drug address unmet medical needs for a condition for which treatment or diagnosis is not addressed adequately by available therapy
Drug Price Negotiation Process
After CMS sends an initial written offer to the Primary Manufacturer, the Primary Manufacturer may submit an optional written counteroffer if CMS’ initial offer is not accepted. The counteroffer must be submitted using the Counteroffer Form, available within the HPMS, no later than 30 days after the date of receipt of CMS’ initial offer. After the Primary Manufacturer submits the counteroffer, the negotiation process may include the following steps, depending on when and whether agreement on the MFP is reached and an offer is accepted:
- CMS may submit a written response to the counteroffer within 30 days after receipt of the counteroffer or within 60 days of sharing the initial offer, whichever is later.
- If CMS does not accept the Primary Manufacturer’s written counteroffer, there may be up to three negotiation meetings between the Primary Manufacturer and CMS.
- CMS will submit a final written offer to the Primary Manufacturer if no agreement is reached before the end of the negotiation meetings, which the manufacturer must accept or decline.
Estimated Burden for Primary Manufacturers
Using data from the Bureau of Labor Statistics’ May 2023 National Industry-Specific Occupational Employment and Wage Estimates for the Pharmaceutical and Medicine Manufacturing industry, CMS has derived hours and wage estimates for estimating the burden associated with completing the Negotiation Data Elements ICR Form and Counteroffer Form.
- Negotiation Data Elements ICR Form. CMS estimates a total burden of 7,500 hours and total cost of $790,837.20 for all Primary Manufacturers to complete the Negotiation Data Elements ICR Form for IPAY 2027. This estimate breaks down to 500 hours and $52,722.48 per Primary Manufacturer. For purposes of this information collection, CMS assumes there will be up to 15 Primary Manufacturers, one for each selected drug, and up to 15 drugs selected for negotiation for IPAY 2027, which represents the statutory maximum. The collection of this data will be a one-time cost for each selected drug, and CMS assumes each Primary Manufacturer will spend, on average, the same amount of time to collect, aggregate, analyze, and report the data for a selected drug. While a Primary Manufacturer may have multiple selected drugs, CMS assumes that a Primary Manufacturer will require the same time and effort to submit data for each selected drug.
- Counteroffer ICR Form. CMS estimates a total burden of 3,063.75 hours and $486,924.68 for submitting a Counteroffer Form per selected drug. This estimate assumes that counteroffers will be submitted by Primary Manufacturers for up to 15 selected drugs, and completing the Counteroffer Form will be a one-time cost for each selected drug for which a Primary Manufacturer submits a counteroffer. CMS assumes each Primary Manufacturer will spend, on average, the same amount of time to develop and submit counteroffer information for each selected drug.
Interested stakeholders should submit comments to the ICR here by September 3, 2024.
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