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Medicare to move to reference pricing

Medicare to move to reference pricing

This is what I took away from the 91-page CMS guidance regarding the Inflation Reduction Act’s (IRA) maximum Fair Price (MFP) negotiations, which was released around 10 days ago. Below are the highlights.


CMS will be looking for the most expensive drugs from the 10 for price negotiations for the initial IRA price. FDA is particularly looking for small molecules products without generics that have been available for seven years (so they are eligible to negotiate at year 9) and biologic drugs with no biosimilars, which have been available for 11 years (so the can negotiate in year thirteen).   The highest cost drugs are those that have among the “50 qualifying single source drugs with the highest Total Expenditures under Part D”.  These are identified with Part D prescription event (PDE data).

There are many exclusions that drugs are not eligible for negotiation.

  • Orphan drugsCMS will not exempt all orphan drugs from price negotiations.  Many drugs can have an orphan indication, but they also have another indication for non-orphan diseases.  “CMS will exclude a drug or biological product that is designated as a drug for only one rare disease…

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