Inflation Reduction Act Implementation: Public Input Opportunities Related to U.S. Medicare Drug Price Negotiation Program

The Centers for Medicare & Medicaid Services (CMS) recently announced that it will seek public input on key aspects of its implementation of the Inflation Reduction Act (IRA), including its guidance for the Medicare Drug Price Negotiation Program (the Program).

Beginning in 2026, the Program will set a price cap, called the Maximum Fair Price, on a fixed number of “negotiation-eligible drugs” reimbursed under Medicare Part B and D. CMS announced that it intends to seek public input in spring 2023 on a number of elements of its guidance for the Program, including:

1. the terms and conditions contained in manufacturer agreements, including each party’s responsibilities
2. the approach for considering the manufacturer-reported data elements and evidence about alternative treatments
3. the process for the offer and counteroffer exchange between the Secretary of the Department of Health and Human Services and manufacturers
4. the content of an explanation for the Maximum Fair Price
5. the method for applying the Maximum Fair Price across different dosage forms and strengths of a selected drug
6. the dispute resolution process for specific issues that are not exempt from administrative and judicial review
7. the processes for compliance monitoring and imposition of civil monetary penalties for violations of the Program

CMS also intends to issue two information collection requests in spring 2023 related to the Program’s (1) Negotiation Data Elements and (2) Offer and Counteroffer Exchange.

CMS separately announced an information collection notice related to the small biotech drug exception to the Program for Part D drugs.

Part D “small biotech drugs” are excluded from the Program for the initial price applicability years of 2026, 2027, and 2028. These drugs are defined as:

Drugs or biological products with respect to which the total expenditures under Medicare Part D for those drugs are equal to or less than 1% of the total expenditures for all covered Part D drugs and that are equal to at least 80% of total expenditures for a manufacturer’s covered Part D drugs.

Part B drugs are also subject to the Program with Maximum Fair Prices taking effect in 2028. Although the small biotech drug exception also applies with respect to these Part B drugs, CMS’s information collection notice relates only to Part D drugs. CMS is nevertheless likely to use this information collection notice to inform its future Part B drug policy under the Program.

Pursuant to the notice, CMS will make available a form that manufacturers may submit to the agency for purposes of allowing it to determine whether a drug qualifies for the Part D small biotech drug exception. The form will require manufacturers to submit information concerning their companies and their products. If a manufacturer seeks the exception for a covered Part D drug it acquired after December 31, 2021, the manufacturer will also be required to submit information related to the entity that had the Medicare Coverage Gap Discount Program Agreement for the drug as of December 31, 2021.

The proposed form would be due in summer 2023, before CMS publishes the selected drug list on September 1, 2023, for the initial price applicability year of 2026.

Stakeholders are welcome to submit comments on this information collection notice until March 27, 2023. Comments are requested regarding:

• burden estimates;
• the necessity and utility of the proposed information collection for the proper performance of CMS’s functions;
• ways to enhance the quality, utility, and clarity of the information to be collected;
• the use of automated collection techniques or other forms of information technology to minimize the information collection burden; or
• any other aspect of the information collection.

Sidley is closely monitoring the prescription drug provisions of the IRA. Contact your Sidley attorney or the authors below for more information on the implementation of the legislation.