Medicare Price Negotiation Will Continue Under Trump With Possible ‘Improvements’

The Trump Administration will continue the second cycle of Medicare price negotiations, which includes 15 drugs selected by the Biden Administration, but also signaled that changes will be considered.

“As the second cycle begins under the Trump Administration, CMS is committed to incorporating lessons learned to date … and to considering opportunities to bring greater transparency in the negotiation program,” the US Centers for Medicare and Medicaid Services announced 29 January.

CMS released the list of drugs chosen for the second negotiation cycle on 17 January.

CMS also “intends to provide opportunities for stakeholders to provide specific ideas to improve the negotiation program, consistent with the goals of achieving greater value for beneficiaries and taxpayers and continuing to foster innovation,” the agency said.

CMS has not provided much transparency into its approach to the negotiations, leaving sponsors unsure about the factors the agency must balance when developing pricing offers.

Companies also are concerned about CMS’ approach to considering all formulations of an active moiety as the same product for the purpose of negotiation, as well as requiring generic and biosimilar competition must be “bona fide” to exempt a brand from the process.

The announcement came amid speculation that the administration may not adhere to the negotiation schedule in the Inflation Reduction Act and “pause” the program while developing potential changes.

Under the law, the next steps include a 28 February deadline for the affected manufacturers to agree to participate in the process, followed by their submission of internal data on drug development and production costs and sales by 1 March.

Companies also will provide information supporting the value of their drugs relative to therapeutic alternatives.

The negotiation process will continue through October and the final prices will be announced by 30 November. The negotiated prices for the second cycle will go into effect on 1 January 2027. (See sidebar below for more on the drugs in the second round of price negotiations.)

Support For Negotiation From HHS Nominee Kennedy

Health and Human Services Department Secretary nominee Robert F. Kennedy Jr. discussed the administration’s support for the negotiation program during his 29 January confirmation hearing at the Senate Finance Committee.

Kennedy said a White House executive order on the program had been released earlier in the day. But he was either mistakenly describing the CMS release or an EO on negotiation that has not been issued.

“As you know Trump was very aggressive in his first term about negotiating drug prices,” Kennedy said in response to a question from Sen. Catherine Cortez Masto, D-NV. “He has instructed me, and I’ve met with him repeatedly ... on this, that we need lower prices for seniors in this country.”

Cortez Masto had asked Kennedy to square his own frequently expressed position favoring lower drug prices with President Trump’s recent executive order rescinding an earlier Biden order directing HHS to propose new payment models that could lower drug prices.

Kennedy did not address Trump’s EO on the payment models. But the EO does not appear to have stopped the payment model involving CMS-facilitated outcomes-based contracting in Medicaid for sickle cell gene therapy.

The order may impact other models proposed by HHS, including one targeting drugs with accelerated approval from the US Food and Drug Administration.

International Reference Pricing

Kennedy addressed international reference pricing for drugs in an exchange with Sen. Bernie Sanders, I-VT. Sanders asked if Kennedy would support legislation establishing that the US “should not pay a nickel more for the same prescription drug than anywhere else in the world.”

Kennedy said he has discussed the issue with President Trump.

“I think in principle we should end the disparity” in prices between the US and other developed countries, Kennedy said.

He did not elaborate on how the disparity should be narrowed.

Drug firms argue that developed countries should pay higher prices to support research and development, which now is primarily funded by revenues generated in the US.

Supportive Of But Not Familiar With PBM Reform Specifics

Sen. Maria Cantwell, D-WA, asked Kennedy if he favored legislation to reform the pharmacy benefit manager industry.

Kennedy admitted he is not familiar with the current PBM legislation on reform but said, “I support the efforts of this committee to come up with bipartisan legislation.”

“President Trump wants to get the excess profits away from the PBMs and send it back to primary care and the patients in this country for high quality health care,” Kennedy said.

Kennedy also dismissed speculation that he has met with members of the PBM industry to discuss approaches to self-regulation and reform.

“You want to hear from the other side,” he said. “That doesn’t mean I would let the PBMs write their own ticket.”

Legislation “delinking” PBM compensation from the list price of drugs and other reforms came close to passing Congress as part of a December federal funding bill. The policies were stripped from the bill at the last minute to streamline its progress.

Kennedy suggested an anti-pharma bias at various points during the hearing. He repeated claims that drugs for ADHD and depression are over-prescribed, but also made clear that his main focus at HHS would be rooting out the causes of chronic illness in the US.

“President Trump has asked me to end the chronic disease epidemic and make America healthy again,” Kennedy said. “I’m in a unique position to end that and that is what I’m doing.”

If “we don’t end that problem … all of the other disputes we have about who’s paying, whether it’s insurance companies or whether it’s providers … whether it’s patients or families, all of those are moving chairs around on the deck of the Titanic," he added. “And our ship is sinking.”