The Centers for Medicare and Medicaid Services (CMS) released the names of the top 10 drugs by Medicare spend on Aug. 29. The list is the first step in the new Medicare drug price negotiation system that was put into place by the Inflation Reduction Act in 2022. The new negotiated prices that will result from this process will take effect for the 2026 Medicare plan year.

The drug companies who manufacture the listed drugs now have until October 1 to sign the agreements to participate in the negotiation process for plan year 2026. The following day is the deadline for all manufacturer-specific data for CMS to consider and for any public comment on possible therapeutic alternatives.

After that point, CMS will conduct a series of listening sessions with the public and meetings with the manufacturers prior to submitting the maximum fair price initial offer on February 1, 2024. That offer will then begin the negotiation period which will end on August 1, 2024 with an announcement of the final negotiated price a month later.

Drugs chosen by gross Part D spend

The drugs chosen were single source drugs, which means that they have been approved or licensed for at least 7 years (11 years for biologics) and in that time there has been no generic or biosimilar competition. After eliminating some drugs as subject to exemptions (i.e. orphan drugs, small biotech drugs, plasma-derived products, etc.) CMS then ranked the drugs on the basis of gross spend from Medicare Part D over the course of the 12 months stretching from June 1, 2022 through May 31, 2023.

Due to the focus on gross spend as opposed to per patient cost, the top drugs on the list are also used by large numbers of the Medicare Part D population. The top drug, which has a gross spend of $16.4 billion was used by more than 3.7 million Medicare Part D enrollees.

After this initial negotiation period for the 2026 group is complete, CMS is expect to add an additional 15 drugs to the program in 2027 and then another 15 in 2028.

Reed Smith will continue to follow developments in the Medicare Prescription Drug Negotiation Program. If you have further questions on this process, please contact the health care lawyers at Reed Smith.