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CMS rejects drugmaker price offers, kick-starting Medicare talks

BY: ROBERT KING | 04/02/2024 12:17 PM EDT

CMS said Tuesday it shot down drugmakers’ price offers for 10 pharmaceuticals subject to Medicare price negotiations, kicking off talks expected to stretch through the summer.

The agency’s decision is the latest development in a negotiation process created by the Inflation Reduction Act. Officials touted the prospect of savings for those on Medicare, but the final prices won’t take effect until 2026.

“CMS is proud to be negotiating in good faith with drug manufacturers to lower the prices of some of the most expensive drugs for people with Medicare,” Administrator Chiquita Brooks-LaSure said in a statement.

CMS sent out initial pricing bids to the nine manufacturers of the 10 drugs in February. All the companies rejected the government’s proposals and responded with their own price offers.

CMS and the drugmakers have not made the price offers public, in part because that information is considered proprietary and possibly could impact the markets. According to the IRA, the agency has offered for the companies to “participate in further discussions.”

A timeline from the agency shows the negotiations are expected to stretch through Aug. 1. CMS is expected to release final price offers by Sept. 1.

If a company does not accept the offer, then it can decide to no longer participate in the Medicare and Medicaid programs, key sources of revenue for the drugmakers. The companies could also be subject to an excise tax.

The announcement comes as several drugmakers continue to fight drug negotiations in the courts. That legal battle has not been going well for the companies.

Last month, a federal judge struck down a challenge to the negotiation process brought by AstraZeneca, one of the makers of the 10 drugs. AstraZeneca did not have legal standing to challenge the negotiation process, the judge ruled. AstraZeneca has not said whether it would appeal the ruling.

Lawsuits brought by drugmakers Janssen, Novartis, Novo Nordisk and Bristol Myers Squibb are also making their way through the courts. A federal judge heard oral arguments on all the cases in a combined hearing last month.

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