The historic Inflation Reduction Act of 2022 has fundamentally improved the affordability of and access to prescription drugs for millions of people with Medicare. The law laid out aggressive timelines for implementing the Medicare Drug Price Negotiation Program. As the director of Medicare, my team and I worked thoughtfully and diligently to stand up the program — on time and successfully.
As a physician, I have seen how life-changing innovative treatments can be — but only if people can afford them. As an economist, I know how important it is to use data to drive market improvements. The first cycle of negotiations resulted in meaningful projected savings for Medicare and for people with Medicare — an estimated $6 billion for the program if the negotiated prices were in place in 2023 for the first 10 selected drugs, and $1.5 billion in estimated out-of-pocket savings for people with Medicare prescription drug coverage when the negotiated prices are set to go into effect in 2026. All of this was achieved while prioritizing innovation and access, and ensuring that the tangible impact of these negotiations for people who rely on prescription drugs to stay healthy was at the center of our work.
There have been questions around how we implemented this program. In this piece, I will dig in further to provide insight into the process.
From the day President Biden signed the Inflation Reduction Act into law, my colleagues at CMS and I sought to be thoughtful, inclusive, transparent, and decisive. We quickly identified and hired experts, from the private sector and across government, so that we would have a robust, multidisciplinary team with clinical expertise, industry experience, and real-world experience with patient care, clinical and cost-effectiveness research, and drug price negotiations in several markets.
As a team, we doubled down on our commitment to transparency and inclusivity. We knew we needed to hear from a diverse range of people — drug manufacturers, patients, caregivers, pharmacists, clinicians, health plans, researchers, and others. Throughout our implementation, we put in place opportunities to gather public input, listen to, and operationalize stakeholder feedback, and ensure that we provided opportunities for all interested parties to engage.
Based on my experience in the private sector, I knew how important roadmaps would be to reaching consensus on a path forward, meeting timelines, and achieving collective goals. Early in our process, we put out a plain language roadmap with a timeline so that people could understand our plan for implementation and associated opportunities for engagement. This was particularly important to help those who do not regularly engage with the government to know how to provide input — thereby improving the diversity of input we received. We held patient-focused listening sessions, issued guidance for public comment, hosted many stakeholder meetings and monthly technical calls, and created opportunities to gather data necessary for implementation. Our process has been inclusive and focused on ongoing and regular engagement with stakeholders and interested parties.
The law laid out how to select drugs for negotiation that are some of the costliest to the Medicare program, and the factors for us to consider in the negotiations. By prioritizing a collaborative approach, we were able to have conversations and receive comments that informed the process to create a true back and forth negotiation program. In particular, we heard uniformly about the importance of the patient voice and of evaluating how drugs impact people in their communities through real-world evidence. We worked with FDA staff to tap into their expertise, including how to consider real-world data in our process. CMS started developing our initial offers by considering the clinical benefit of the selected drugs and their therapeutic alternatives and also considering additional statutory factors. This set the stage for the negotiations to come.
Once we entered the negotiation meetings, our team of multidisciplinary experts and the team of experts from the drug manufacturers each listened to the feedback shared by the other side, and each side adjusted offers accordingly as part of the negotiation process. On five of the drugs, we reached an agreement during the negotiation meeting period, with CMS agreeing to negotiated prices that manufacturers proposed in four of those cases. For the other five drugs, all manufacturers accepted CMS’ final offers, which were again informed by the productive, back-and-forth discussions. At the end of the negotiation period, we successfully achieved agreement on negotiated prices for all 10 drugs.
The themes that have guided the implementation to date — being thoughtful, inclusive, transparent, and decisive — continue to drive CMS’s work moving forward. With the release of the Final Guidance for the second cycle of negotiations and manufacturer effectuation of the negotiated prices in 2026 and 2027, my colleagues and I are continuing to improve upon the program thanks to feedback we receive from a wide array of stakeholders. We are improving the way that we are gathering patient-focused and clinically focused feedback. We are adding additional opportunities for engagement between CMS and participating drug manufacturers. And we are laying out a process that aims to ensure people with Medicare have access to the new, lower, negotiated prices at the pharmacy counter.
CMS will announce up to 15 drugs selected for the second cycle of negotiation by Feb. 1, 2025. There are several opportunities to engage with CMS during the upcoming negotiation process, and we welcome feedback from all interested parties.
In fact, for this second round, we have added new ways for patients to engage in the process through patient-focused events, and increased the number of opportunities for all interested stakeholders to provide us with feedback on the selected drugs that will be used in the negotiation process. We also added new opportunities for additional exchange of offers with manufacturers to allow for additional engagement. All of these changes are meant to help us have another productive round of negotiations.
Prioritizing collaborative engagement with drug manufacturers, patients, health plans, clinicians and others quickly crystallized our clear, shared goal: ensuring that people with Medicare have access to innovative cures and therapies that they need at a price they can afford. I am proud of the tireless work of our expert team who stood up and implemented the negotiation program and who strived to achieve real results for Medicare and people with Medicare drug coverage. Our implementation has shown the importance of working together to put patients at the center of everything we do and make sure that the Medicare program is paying appropriately for some of the costliest and most frequently used prescription drugs. The Negotiation Program is historic, and the successful implementation for the first cycle is only the beginning of the collective success of the program as we implement the next cycle.
Meena Seshamani, M.D., Ph.D., is deputy administrator of the Centers for Medicare & Medicaid Services and director of Center for Medicare.