For most drugs, it is not IF but WHEN they will be negotiated by Medicare so if you thought you could ignore guidance coming out this week, you were wrong. Everyone on the pharma side needs to be thinking of how the Inflation Reduction Act impacts them, even if you’re early on in the pipeline journey. Or, if you really like surprises, ignore it. It will be more exciting that way.
Light Reading. This week the Centers for Medicare & Medicaid Services (CMS) released Medicare Drug Price Negotiation Program Final Guidance for 2027 and Manufacturer Effectuation of the MFP in 2026 and 2027. It clocks in at 313 pages so, for most people, the fact sheet will do just fine. This all builds on the draft guidance from May. CMS made changes to the patient information gathering and will be moving ahead with a townhall-style format for each selected drug. The CMS-selected drug meeting and overall schedule changed a bit for those that are being negotiated and the final guidance fills in some more of the gaps in terms of the Medicare Transaction Facilitator (MTF) (how pharmacies will be made whole for the negotiated price.)
I know that the people at CMS are trying their best, but the MTF is a kerfuffle. Individual payments (including paper checks) floating around and still a 340B duplication concern? It would have been so. much. easier to do it more like the coverage gap discount program. We have just over 12 months to get this cat parade together. I’m glad that it is larger pharma companies that are part of the first wave – they have resources – but eventually this process will impact all types of companies. When people question drug prices, I wonder if they are factoring in the number of people required to do this operational stuff?
Standing for Now. Late last week, CMS released the Medicare prescription drug benefit (Part D) landscape files. These provide information on what Part D plans are available, where and what premiums look like. With all of the changes happening in 2025 for Part D (out-of-pocket cap, shift in liability between plans, manufacturers and the government), many of us were curious how plans would respond.
KFF had a nice summary of the changes. For 2025, there will be 26% fewer standalone prescription drug plans (PDPs) than in 2024; it went from 709 to 524. These are plans that only offer prescription drug coverage as opposed to Medicare Advantage prescription drug plans (MA-PD plans) which combine medical and pharmacy benefits into one plan. There has been concern that PDPs will struggle in the Part D redesign because they do not have the same rebates and liability to shift around the way that MA-PD plans do. Part of this was at least temporarily fixed over the summer when CMS announced a last-minute demonstration providing additional funding for PDP plans which allowed them to keep premium increases limited to $35. Long term it is unclear how PDPs will be able to compete with MA-PD plans based on premiums. MA-PD plan premiums are holding relatively steady. For 2025, already we are seeing the 2nd most popular PDP plan disappear (Aetna’s SilverScript SmartSaver).
Whoopsie. This week the Congressional Budget Office (CBO) released a letter to Congress which said that, upon review of the plan bids, federal spending on Part D will be $10 billion higher in 2025. They underestimated the impact of the Part D redesign on federal spending. In addition, they project that the Part D premium demonstration will cost $5 billion. A factoid that stood out? The average plan bid for standard Part D coverage increased by 179% for 2025.
DTP – Direct to Plan. This week Blue Shield of California announced they were bypassing Humira and purchasing a biosimilar directly from Fresenius Kabi. Cost-sharing for beneficiaries will be $0. Individual carve-outs of drugs could be the way that biosimilars win … and a market for Mark Cuban’s Cost Plus Drugs on other drugs. I continue to believe we’ll see more creative solutions to biosimilar purchasing and beneficiary self-management of drug purchasing.