Behind the scenes of negotiations with the director of Medicare about drug prices

The landmark Inflation Relief Act of 2022 fundamentally improved the affordability of prescription drugs for millions of people with Medicare. The law established an aggressive timeline for implementing the Medicare drug price negotiation program. As Director of Medicare, my team and I worked thoughtfully and diligently to deliver 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 improve the market. The first round of negotiations resulted in significant projected savings for Medicare and for people on Medicare: approximately $6 billion per program, if negotiated prices remain in effect in 2023, for the first 10 drugs selected, and $1.5 billion in additional costs. pocket savings for people with Medicare prescription drug coverage when negotiated prices take effect in 2026. All of this was achieved by prioritizing innovation and access, and ensuring that these negotiations had a tangible impact on people who rely on prescription medications. Keeping their health healthy was at the center of our work.

There were questions about how we implemented this program. In this article, I will delve deeper to better understand this process.

Since the day President Biden signed the Inflation Relief Act, my colleagues at CMS and I have been committed to acting thoughtfully, inclusively, transparently, and decisively. We quickly identified and hired experts from both the private sector and government to ensure we had a robust, multidisciplinary team with clinical expertise, industry experience, and real-world experience in patient care, clinical and cost-effectiveness studies, and drug delivery. price negotiations in several markets.

As a team, we have redoubled our commitment to transparency and inclusion. We knew we needed to hear from a variety of people—drug manufacturers, patients, caregivers, pharmacists, physicians, health plans, researchers, and others. During implementation, we provide opportunities to gather public input, listen to and incorporate stakeholder feedback, and provide opportunities for all stakeholders to participate.

Based on my experience working in the private sector, I knew how important roadmaps are to building consensus on the path forward, meeting deadlines, and achieving collective goals. Early in our process, we created a roadmap, written in simple language with timelines, so people could understand our implementation plan and the associated engagement opportunities. This was especially important to help those who do not regularly engage with government know how to provide information, thereby improving the variety of information we receive. We held patient-focused sessions, issued recommendations for public comment, held numerous stakeholder meetings and monthly technical calls, and created opportunities to collect data needed for implementation. Our process was inclusive and focused on ongoing and regular engagement with stakeholders and stakeholders.

The law determined how to select drugs for negotiation that are among the most costly for the Medicare program and the factors we must consider in negotiations. By prioritizing a collaborative approach, we were able to have conversations and receive comments that served as the basis for creating a true program of bilateral negotiations. In particular, we heard uniformly about the importance of patient voice and assessing how drugs affect people in their communities, based on real-world data. We worked with FDA staff to leverage their expertise, including how to incorporate real-world data into our process. CMS began developing our initial proposals by considering the clinical benefit of the selected drugs and their therapeutic alternatives, as well as additional regulatory factors. This paved the way for future negotiations.

Once we entered negotiation meetings, our team of multidisciplinary experts and a team of drug manufacturer experts listened to the other side’s feedback, and each side adjusted the proposals as part of the negotiation process accordingly. For five drugs, we reached agreement through negotiations, with CMS agreeing to the negotiated prices that manufacturers offered in four of those cases. For the remaining five drugs, all manufacturers accepted CMS’s final proposals, which again were based on productive bipartisan discussions. Following a period of negotiations, we successfully reached an agreement on negotiated prices for all 10 drugs.

The themes that have driven implementation so far—thoughtful, inclusive, transparent, and decisive—continue to drive CMS’s work. With the release of final guidance for the second round of negotiations and the introduction of negotiated pricing by manufacturers in 2026 and 2027, my colleagues and I continue to refine the program based on the feedback we receive from a wide range of stakeholders. We are improving the way we collect patient-centered and clinically focused feedback. We are adding additional opportunities for collaboration between CMS and participating drug manufacturers. And we’re developing a process to ensure that people on Medicare have access to new, lower, negotiated prices at the pharmacy.

CMS will announce up to 15 drugs selected for the second round of negotiations by February 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 participate in the process through patient-focused activities and increased opportunities for all stakeholders to provide us with feedback on the selected drugs that will be used in the negotiation process. We’ve also added new opportunities for additional exchanges of proposals with manufacturers to enable additional engagement. All of these changes are designed to help us have another productive round of negotiations.

Prioritizing collaboration with drug manufacturers, patients, health plans, doctors and others quickly established our clear and common goal: to ensure people with Medicare have access to the innovative drugs and treatments they need at a price they can afford allow. I am proud of the tireless work of our team of experts who advocated and implemented the negotiating program to achieve real results for Medicare and people with Medicare drug coverage. Our implementation demonstrated the importance of working together to put patients at the center of everything we do and ensure that Medicare adequately pays for some of the most expensive and most commonly used prescription drugs. The negotiation program is of historical significance, and the successful implementation of the first cycle is only the beginning of the collective success of the program as the next cycle is implemented.

Meena Seshamani, MD, PhD, is associate administrator of the Centers for Medicare and Medicaid Services and director of the Center for Medicare.