On December 20, 2024, the Centers for Medicare & Medicaid Services (CMS) released explanations and redacted manufacturer submissions for the first round of maximum fair price (MFP) negotiations under the Inflation Reduction Act (IRA).1-23
In our review of the 10 manufacturer submissions and CMS justifications, 3 key questions arose from the non-redacted material that was published:
- Did CMS take patient perspectives into account during the negotiation process?
- Did CMS consider a therapeutic alternative for every medication that shares the same indication as the selected medication?
- Did CMS include every generic alternative possible during negotiations?
1. Not every medication with the same indication as the selected product was considered a therapeutic alternative4-13
A key part of the MFP negotiation process is identifying and determining therapeutic alternatives (TAs) for each selected product. CMS identified the TAs for each selected product that were used as comparators to evaluate the selected product.2,3 It is important to note that CMS emphasized in the published explanation that the term “therapeutic alternative,” as mentioned in the Medicare Drug Price Negotiation Program guidance, is specific to the IRA drug price negotiation process only and does not imply that TAs are interchangeable with the selected drug.3-13 The guidance put forth by CMS stated that for the initial price applicability year (IPAY) 2026 negotiation cycle, CMS could use data from a variety of sources in their efforts to determine appropriate TAs, including data from the primary manufacturer, public submissions, FDA-approved indications, drug classification systems, CMS-recognized Part D compendia, clinical guidelines, literature reviews, drug class reviews, and peer-reviewed studies for both brand name and generic drugs, as well as off-label uses listed in compendia.2,3 Per CMS guidance, CMS could also consult with the FDA, clinicians, patient organizations, key opinion leaders, and review clinical evidence and public submissions.2,3
The TAs for each selected product may not have aligned with other stakeholder expectations. For example, the selected drug Entresto® (sacubitril and valsartan), a first-in-class angiotensin receptor-neprilysin inhibitor (ARNi) for treating heart failure (HF), is recommended by the 2022 American Heart Association (AHA)/American College of Cardiology (ACC)/Heart Failure Society of America (HFSA) guidelines. The guidelines state that eligible patients with heart failure with reduced ejection fraction (HFrEF) should be treated with an angiotensin-converting enzyme inhibitor (ACEi), angiotensin II receptor blocker (ARB), or ARNi as appropriate.24 The guidelines also recommend beta-blockers, diuretics, and/or sodium-glucose cotransporter-2 (SGLT2) inhibitors, as well as additional medications, such as mineralocorticoid receptor antagonists (MRAs) like spironolactone or eplerenone, depending on patient-specific factors.24 The TAs for Entresto® only included 2 ACE inhibitors (enalapril and lisinopril), 2 ARBs (losartan and valsartan), and 1 MRA (spironolactone).4 No drugs from the other recommended therapeutic classes, such as SGLT2 inhibitors, beta-blockers, and diuretics, were listed as TAs.4,24 It is unclear if these other classes were excluded because the 2022 AHA/ACC/HFSA guidelines recommend ACE inhibitors, ARBs, or ARNis as options to each other, while other classes are separate pillars for treatment.4
Not all available drugs within a therapeutic class were included as TAs for a selected product either. For Entresto®, the MRA spironolactone was included, but not eplerenone, which is in the same drug class as spironolactone.4,24 Additionally, only 2 specific ACEis and ARBs were listed, excluding all the other available ACEi and ARB options recommended by the 2022 AHA/ACC/HFSA guidelines within those classes.4,24 This specificity was also evident in the TA selections for the type 2 diabetes mellitus (T2DM) indication of selected product Januvia®(sitagliptin). TAs for Januvia® for the management of T2DM included the glucagon-like peptide-1 receptor agonists (GLP-1 RAs) semaglutide (Ozempic®) and dulaglutide (Trulicity®) but omitted other GLP-1 RAs such as liraglutide (Victoza®).5,25,26
It is unclear whether these inconsistencies in CMS’ selection of therapeutic alternatives was intentional due to a clinical finding during CMS’ review of the selected product, or simply to narrow the list of TAs to include only those products with the highest utilization in the Medicare population. There is a need for greater transparency in CMS’ decision-making process to ensure all parties involved in the MFP negotiation process understand why certain therapeutic alternatives were considered over others.
2. CMS did not include all potential generics as TAs4-13
CMS guidance states that generics can be included as TAs for a selected product, which is an important consideration in developing an offer price. For IPAY 2026, CMS used the Part D net price(s) or ASP(s) of therapeutic alternatives, often including lower-cost generics, as the starting point for their negotiation with manufacturers.2,3 Therefore, inclusion of low-cost generics would theoretically lower CMS’ starting price in negotiations. For IPAY 2027, CMS will continue this approach, which also takes into consideration the total Medicare utilization of selected TAs, including generics.2 However, we now know that CMS did not include generics for all negotiated products in IPAY 2026.4-13 The TAs for the selected anticoagulant medication Eliquis® (apixaban) did not include warfarin—the only generic oral anticoagulant available—which is used in some clinical situations such as in patients with mechanical heart valves.8,9,27-30 In contrast, the TAs for Januvia®, Jardiance® (empagliflozin), and Farxiga® (dapagliflozin) for the management of T2DM included generics from multiple drug classes, such as biguanides (metformin), sulfonylureas (glimepiride and glipizide), and thiazolidinediones (pioglitazone).5-7,26
There may have been multiple reasons for the variability of the inclusion of low-cost generics between selected products. CMS could have made their final selection based on clinical rationale, patient input, utilization rates and/or influence from the manufacturer negotiations themselves. For example, warfarin may have been excluded as a TA for Eliquis® for clinical reasons such as the side effect profile and potential for drug interactions. The redacted data published by CMS for Eliquis® revealed that patients, providers, and other parties wrote letters to CMS sharing the clinical and quality of life improvements since newer oral anticoagulant medications, such as Eliquis®, were made available compared with previous treatment with warfarin.8,9,14,15 CMS may have also factored in any declining Medicare utilization and market share data they may have had for warfarin in their assessment. CMS did not provide a rationale for the TAs chosen for each selected product, but it was inferred that considerations beyond product cost were taken into account.4-13
3. CMS seemed to consider patient perspective and recognize the value of various stakeholder input in this process2-23,31
CMS cited the consideration of patient perspectives at least once in all 10 MFP explanations.4-13 This suggests that patient point-of-view was a serious consideration in the determination of the final MFP price of a selected drug for CMS, in addition to information gathered from manufacturer-supplied information.
Additionally, for products selected for negotiation in IPAY 2027, CMS is soliciting input from other stakeholders that are not manufacturers.31 CMS provided the following examples of individuals and organizations that may choose to address a category of questions based on their personal or professional insight and expertise in their updated information collection request (ICR) for selected products undergoing negotiation in IPAY 2027. These respondent categories are described in more detail in Table 1.31
Table 1: Types of Respondents Listed in the IPAY 2027 Final ICR Form31
Respondent Type | Respondent Example |
---|---|
Manufacturer-Focused Input | A primary manufacturer of a selected product |
Patient- or Caregiver-Focused Input | An individual with experience taking a selected product or a potential TA for a selected product for the same indication, a caregiver’s experience with caring for someone taking such a medication, patient organizations that can provide insights into the patient experience of taking such a product or living with the condition the selected product treats |
Clinical-Focused Input | Clinicians, pharmacists, hospitals, or any other entity with clinical experience with the selected product and/or its potential therapeutic alternatives |
Health Research-Focused Input | Researchers, academic centers, patient groups, or other entities with evidence-based input regarding the selected product and/or its therapeutic alternatives |
Other Public Input | Any other interested party that wishes to respond to the questions |
Lumanity will continue to closely monitor any updates to this process under the new administration for the selected products that will undergo negotiation in IPAY 2027. Now that CMS has published the next 15 products, it will be interesting see if these trends observed in IPAY 2026 continue. Stay connected with Lumanity for expert analysis and guidance as we continue to monitor and report on these critical developments.
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References
- Centers for Medicare & Medicaid Services. Medicare Drug Price Negotiation Program: IPAY 2027 final guidance and manufacturer effectuation. CMS.gov. 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Medicare Drug Price Negotiation Program: revised guidance, implementation of Sections 1191–1198 of the Social Security Act for initial price applicability year 2026. CMS.gov. Published June 30, 2023. Accessed January 16, 2025. https://www.cms.gov/files/document/revised-medicare-drug-price-negotiation-program-guidance-june-2023.pdf
- Centers for Medicare & Medicaid Services. Medicare Drug Price Negotiation Program: final guidance for initial price applicability year 2027 and manufacturer effectuation of the maximum fair price in 2026 and 2027. CMS.gov. Published October 2, 2024. Accessed January 16, 2025. https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Entresto: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Januvia: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Jardiance: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Farxiga: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Eliquis: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Xarelto: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. maximum fair price (MFP) explanation for Enbrel: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Imbruvica: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Novolog/Fiasp: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Maximum fair price (MFP) explanation for Stelara: introduction and narrative. Redacted meeting summaries. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Eliquis. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Xarelto. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Enbrel. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Entresto. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Farxiga. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Imbruvica. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Januvia. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Jardiance. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Novolog/Fiasp. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Centers for Medicare & Medicaid Services. Redacted data submitted by the primary manufacturer and other interested parties for Stelara. Published December 20, 2024. Accessed January 16, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Heidenreich PA, Beckman JA, et al. 2022 ACC/AHA/HFSA Guideline for the Management of Heart Failure. J Card Fail. 2022;28(5):e1-e167.
- Victoza (liraglutide). Prescribing Information. [package insert]. US Food and Drug Administration website. Revised January 2010. Accessed January 14, 2025. https://www.accessdata.fda.gov/drugsatfda_docs/label/2010/022341lbl.pdf
- American Diabetes Association Professional Practice C. 19. Pharmacologic approaches to glycemic treatment: standards of care in diabetes‑2025. Diabetes Care. 2025;48(Supplement_1):S167.
- Ortel TL, Neumann I, Ageno W, et al. American Society of Hematology 2020 Guidelines for Management of Venous Thromboembolism: treatment of deep vein thrombosis and pulmonary embolism. Blood Adv. 2020;4(19):4693-4738.
- Warfarin. Prescribing information. [package insert]. US Food and Drug Administration website. Revised October 2011. Accessed January 14, 2025. https://www.accessdata.fda.gov/drugsatfda_docs/label/2011/009218s107lbl.pdf
- Eliquis. Prescribing information. Bristol Meyers Squibb and Pfizer; 2012.
- Xarelto. Prescribing Information. Janssen Pharmaceutical Companies; 2011.
- US General Services Administration. Office of Information and Regulatory Affairs. Office of Management and Budget. ICR for 2027. Accessed January 14, 2025. https://www.reginfo.gov/public/do/DownloadDocument?objectID=149900303