Today I’m doing a presentation for patient advocates on the Initial Price Applicability Year (IPAY) Guidance 2027 that the Centers for Medicare & Medicaid Services put out a few weeks ago. I thought you might enjoy the overview as well.

Long story short – the guidance is focused on the Medicare negotiation process for 2027. Comments due on July 2. If I were a patient advocate, I would definitely write comments on Medicare’s approach patient engagement and their utilization management/formulary review.

But taking a step back and putting all of this into context, the Inflation Reduction Act (IRA) passed almost two years and, since then, a lot has happened. In the Medicare prescription drug benefit we have $0 vaccines, $35/month cap on insulin and cost-sharing in the catastrophic phase has been eliminated (putting a cap on out-of-pocket spending at just over $3,300 for most patients.)

CMS is in the middle of the process of “negotiating” prices for 10 Part D drugs, to be effective 1/1/26. I use quotation marks because I don’t see it as a true negotiation. If manufacturers don’t ultimately agree to whatever CMS offers, they must pull all their drugs from Medicare and Medicaid. An outcome that a manufacturer can’t really afford to take if they have shareholders – nor would they want to because of patients.

This IPAY 2027 is intended to be the initial guidance for the 15 Medicare Part D drugs that will be selected by 2/1/25 for a “negotiated price” effective date of 1/1/27. But it covers a few key areas of interest for patient advocates:

• There are not a lot of changes overall – not in how drugs are eligible or in the bona fide marketing standard (for generic/biosimilar) or how “negotiated” prices will be arrived at

• CMS is looking for feedback on how to improve patient-focused listening sessions. Great news because we can all learn from our mistakes, even CMS. The listening sessions in the Fall were less than ideal. CMS is also considering including a section for patient and/or caregiver experience in the data elements collection that is part of IPAY 2027.

• CMS provided a little more information around how the actual discount on the price of the negotiated product will get back to pharmacies. There will be a Medicare Transaction Facilitator who will facilitate the data exchange between plans and manufacturers and CMS “may” have the MTF be able to facilitate the financial transaction. This seems to make it all way harder than it had to be but … it is where we are. Payment is due in 14 days and 340B claim identification is voluntary.

Overall, we know way more than we did back in August of 2022 but … a lot of what we figured out is the unintended consequences and pitfalls:

• Looks like we’ll continue to see a preference for high cost, high rebate drugs
• Biosimilars – good for patients but in a tough spot
• Orphan drug designation potentially hurting innovation
• Negotiated prices and how they are arrived at still a mystery
• The backend transaction process for getting negotiated prices a lot of work for pharmacies and not great for manufacturers
• Patient engagement plan by CMS for 2026 felt like a ‘check the box’ exercise

What can be done? Comments. Let CMS know what would work better. But also keep looking for ways to ensure biosimilars and orphan drugs have a path forward (whether legislation or regulation.)