CMS announced the 15 drugs for the second round of negotiations on January 17, 2025, and announced on March 14, 2025, that all manufacturers had agreed to participate.
On March 14, 2025, the Centers for Medicare and Medicaid Services (CMS) announced that it had signed negotiation agreements with the manufacturers of all 15 drugs selected for its second round of negotiations under the Drug Price Negotiation Program, a program established by the Inflation Reduction Act to lower prices for high-expenditure Medicare Parts B and D drugs. This second round of negotiations follows the completion on August 1, 2024, of negotiations for 10 other high-expenditure drugs—negotiations that led to price reductions ranging from 38 percent to 79 percent. Negotiated prices from the second round will be finalized no later than November 1, 2025, and will go into effect January 1, 2027. Providers working with these drugs should prepare now for how lower prices may affect revenue—including potentially decreased revenue per drug as well as potential increased use of certain drugs—and other industry actors should watch CMS’ implementation of this program for guidance on how it will affect the industry moving forward.
As outlined in greater detail in previous Duane Morris Alerts from March 29, 2023, June 28, 2023, and October 13, 2023, the negotiation program requires CMS to negotiate maximum fair prices (MFPs) for select high-expenditure drugs and biological products that have no generic alternatives. Beginning in 2023, CMS started to select a group of such drugs and biologics every year based on Part D expenditures, gather information on them from manufacturers and the public, negotiate with manufacturers to establish lower prices, and then publish an MFP for each drug or biologic. Once effective, MFPs will remain in place until a generic or biosimilar drug enters the market or the drug or biologic becomes eligible for renegotiation (through the addition of a new indication, a change of monopoly status or another material change).
The drugs selected for the first round, which treat conditions such as diabetes, heart failure, chronic kidney disease and blood cancers, accounted for $56.2 billion in gross Part D covered prescription drug costs in 2023. CMS estimates that had these negotiated prices been in place in 2023, net covered prescription drug costs would have been $6 billion lower. Negotiated price reductions (as measured by the list price for a 30-day supply) included reducing Imbruvica from $14,934 to $9,319, reducing Stelara from $13,836 to $4,695 and reducing Enbrel from $7,106 to $2,355. Those first-round prices will go into effect on January 1, 2026.
CMS announced the 15 drugs for the second round of negotiations on January 17, 2025, and announced on March 14, 2025, that all manufacturers had agreed to participate. Together, the 15 drugs accounted for $40.7 billion in gross covered prescription drug costs under Part D from November 1, 2023, to October 31, 2024 (roughly 14 percent of gross spending during that time). The drugs and manufacturers for this second round, along with their pricing and utilization data, are as follows, with Part D costs and enrollee amounts for the above stated time period:
Drug Name |
Participating Manufacturer |
Part D Gross Covered Prescription Drug Costs |
Medicare Part D Enrollees Who Used the Drug |
Austedo; Austedo XR |
Teva Branded Pharmaceutical Products R&D Inc. |
$1,531,855,000 |
26,000 |
Breo Ellipta |
GlaxoSmithKline Intellectual Property Development Ltd. England |
$1,420,971,000 |
634,000 |
Calquence |
AstraZeneca UK Limited |
$1,614,250,000 |
15,000 |
Ibrance |
Pfizer Inc. |
$1,984,624,000 |
16,000 |
Janumet; Janumet XR |
Merck Sharp & Dohme LLC |
$1,082,464,000 |
243,000 |
Linzess |
AbbVie Inc. |
$1,937,912,000 |
627,000 |
Ofev |
Boehringer Ingelheim Pharmaceuticals Inc. |
$1,961,060,000 |
24,000 |
Otezla |
Amgen Inc. |
$994,001,000 |
31,000 |
Ozempic; Rybelsus; Wegovy |
Novo Nordisk Inc. |
$14,426,566,000 |
2,287,000 |
Pomalyst |
Bristol-Myers Squibb Company |
$2,069,147,000 |
14,000 |
Tradjenta |
Boehringer Ingelheim Pharmaceuticals Inc. |
$1,148,977,000 |
278,000 |
Trelegy Ellipta |
GlaxoSmithKline Intellectual Property Development Ltd. England |
$5,138,107,000 |
1,252,000 |
Vraylar |
AbbVie Inc. |
$1,085,788,000 |
116,000 |
Xifaxan |
Salix Pharmaceuticals Inc. |
$1,128,314,000 |
104,000 |
Xtandi |
Astellas Pharma US Inc. |
$3,159,055,000 |
35,000 |
These manufacturers have provided CMS with their manufacturer-specific data, which include items such as unit costs of production and distribution, data on pending and approved patent applications, R&D costs, and revenue and sales volume in the United States.
Next, CMS will host 15 patient-focused roundtable events (one for each drug) from April 16, 2025, to April 29, 2025, to collect patient-focused input on the use of these drugs and their place in the market. These roundtables will not be open to the public, but CMS will also host a livestreamed town hall meeting on April 30, 2025, to discuss the clinical considerations of each drug.
Initial offers for MFPs are due from CMS by June 1, 2025. Between then and November 1, 2025, CMS and the manufacturers will undergo a series of negotiations to settle on MFPs. CMS must publish these MFPs by November 30, 2025, and explanations of those MFPs by March 1, 2026.
The volume of money and patients involved in the second round is less than what was seen in the first round, but still considerable. Roughly 5.3 million Part D enrollees took the above drugs between November 1, 2023, and October 31, 2024, compared to between 8.2 million and 9 million Part D enrollees for the 10 first-round drugs. And these 15 drugs constituted $40.7 billion in gross Part D covered prescription drug costs for the period in question, versus $56.2 billion for the 10 first-round drugs.
Key to note is that a manufacturer whose drug is selected for the Drug Price Negotiation Program must either participate in negotiations or remove the drug from Medicare and Medicaid. For this reason and others, various pharmaceutical manufacturers, trade groups and other parties have filed numerous lawsuits challenging the program. At least eight of those lawsuits are ongoing as of March 25, 2025, seven of which have been appealed to federal circuit courts. Even though the first round of negotiations has finished, MFPs from that round do not go into effect until January 1, 2026, so courts still have opportunity to modify the program before prices change.
Further, since first-round MFPs are not yet in effect, it remains to be seen how these sizeable discounts will affect the industry. Though the very initiation and implementation of the Drug Price Negotiation Program had potential to affect factors like the generic drug market and payor reimbursement of program drugs, there are very few data on the extent to which that has been the case: Most assessments published to date discuss only the potential effects of the program, not the extent to which is already has affected the industry, if at all, in advance of the effective date of first-round prices. Thus, providers working with the drugs from either round as well as other industry actors should follow this second round of negotiations and prepare for the implementation of first-round MFPs to see how the program will affect industry going forward.
Duane Morris’ Pharmacy Litigation Group will be closely monitoring these developments.
For More Information
If you have any questions about this Alert, please contact Jonathan L. Swichar, Bradley A. Wasser, Taylor Hertzler, any of the attorneys in our Pharmacy Litigation Group or the attorney in the firm with whom you are regularly in contact.
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