Proposed Rule2026-12059
Medicare Drug Price Negotiation Program and Medicare Prescription Drug Benefit Program
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Published
June 16, 2026
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This proposed rule would codify the Medicare Drug Price Negotiation Program ("Negotiation Program") and would establish certain new policies for the Negotiation Program and the Medicare Prescription Drug Benefit Program as required by the Inflation Reduction Act of 2022. This proposed rule would also propose a modification to the fixed combination drug policy.
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<title>Federal Register, Volume 91 Issue 115 (Tuesday, June 16, 2026)</title>
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[Federal Register Volume 91, Number 115 (Tuesday, June 16, 2026)]
[Proposed Rules]
[Pages 36236-36368]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-12059]
[[Page 36235]]
Vol. 91
Tuesday,
No. 115
June 16, 2026
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 423 and 429
Medicare Drug Price Negotiation Program and Medicare Prescription Drug
Benefit Program; Proposed Rule
Federal Register / Vol. 91, No. 115 / Tuesday, June 16, 2026 /
Proposed Rules
[[Page 36236]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 423 and 429
[CMS-4215-P]
RIN 0938-AV90
Medicare Drug Price Negotiation Program and Medicare Prescription
Drug Benefit Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), Health and
Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would codify the Medicare Drug Price
Negotiation Program (``Negotiation Program'') and would establish
certain new policies for the Negotiation Program and the Medicare
Prescription Drug Benefit Program as required by the Inflation
Reduction Act of 2022. This proposed rule would also propose a
modification to the fixed combination drug policy.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on August 17, 2026.
ADDRESSES: In commenting, please refer to file code CMS-4215-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="https://www.regulations.gov/docket/CMS-2026-CMS-2026-2080">https://www.regulations.gov/docket/CMS-2026-CMS-2026-2080</a>. Follow the ``Submit a comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-4215-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-4215-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Elisabeth Daniel,
<a href="/cdn-cgi/l/email-protection#db92899a89beb9baafbebab5bf95bebcb4afb2baafb2b4b5aba9b4bca9bab69bb8b6a8f5b3b3a8f5bcb4ad"><span class="__cf_email__" data-cfemail="531a0112013631322736323d371d36343c273a32273a3c3d23213c3421323e13303e207d3b3b207d343c25">[email protected]</span></a>, or (667) 290-8793, for
issues related to the Medicare Drug Price Negotiation Program.
SUPPLEMENTARY INFORMATION:
I. Executive Summary and Background
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.
A. Executive Summary
1. Purpose
This proposed rule would codify policies related to the
implementation of certain provisions of the Inflation Reduction Act of
2022 (IRA) (Pub. L. 117-169, August 16, 2022) and amendments made by
the Working Families Tax Cut legislation (Pub. L. 119-21, July 4,
2025).
This proposed rule would also codify policies for the Medicare Drug
Price Negotiation Program at part 429 consistent with sections 1191
through 1198 of the Social Security Act (hereinafter ``the Act'') and
codify policies for the Medicare Prescription Drug Benefit Program at
part 423 consistent with section 11001(b) of the IRA, which made
certain amendments to the Act, including with respect to Medicare Part
D.
2. Summary of the Provisions
We propose to codify policies established in final guidance for the
Negotiation Program \1\ in regulatory text. Specifically, we propose to
codify, with limited modification, the policies set forth in guidance
for the Medicare Drug Price Negotiation Program by adding the new part
429 to title 42, Chapter IV of the Code of Federal Regulations and
modifying policies for the Medicare Prescription Drug Benefit Program
at part 423 and welcome comments on these proposals.
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\1\ The most recent final guidance published for the Negotiation
Program is the Medicare Drug Price Negotiation Program: Final
Guidance, Implementation of Sections 1191--1198 of the Act for
Initial Price Applicability Year 2028 and Manufacturer Effectuation
of the Maximum Fair Price in 2026, 2027, and 2028, available at:
<a href="https://www.cms.gov/files/document/ipay-2028-final-guidance.pdf">https://www.cms.gov/files/document/ipay-2028-final-guidance.pdf</a>.
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In addition, we propose new policies for the Medicare Drug Price
Negotiation Program as follows:
<bullet> Proposed Sec. 429.125(b)(4)(i) would clarify treatment of
new formulations were circumstances to emerge where statutory
requirements could be in tension with the general fixed combination
drug policy proposed at Sec. 429.125(b)(4). To do so, we are proposing
a narrow modification to the general fixed combination drug policy for
certain fixed combination drugs that are new formulations. Under the
modification, if CMS determines that products with the same New Drug
Application (NDA)/Biologics License Application (BLA) holder differ in
active moiety(ies)/active ingredient(s) due to the inclusion of an
active moiety/active ingredient that creates a new formulation and
enables an alternative route of administration for the co-administered
active moiety(ies)/active ingredient(s), then CMS will identify the
potential qualifying single source drug using all dosage forms and
strengths of the shared active moiety(ies)/active ingredient(s) that is
offered by the same NDA/BLA holder.
<bullet> Proposed Sec. 429.125(c)(3)(i) would clarify how CMS
would identify the day from which to measure the 7- and 11-year time
since approval and licensure periods for drugs that formerly qualified
for the Orphan Drug Exclusion.
<bullet> Proposed Sec. 429.130 would codify the process and
schedule according to which CMS reviews information to determine if the
manufacturer of a generic drug or biosimilar that is approved or
licensed, respectively, is engaged in Bona Fide Marketing (as defined
in Sec. 429.20) of that generic drug or biosimilar.
<bullet> Proposed Sec. 429.210(c) would provide additional details
related to the Primary Manufacturer transfer of responsibility for all
requirements of the Negotiation Program Agreement to an acquiring
entity.
[[Page 36237]]
<bullet> Proposed Sec. 429.415(a)(2) would explain how CMS would
calculate the 30-day equivalent supply for a selected drug that is
typically administered one time (for example, some vaccines, gene
therapies, and cancer therapies).
<bullet> Proposed Sec. 429.440 would explain how CMS would
implement the Temporary Floor for Small Biotech Drugs for initial price
applicability years 2029 and 2030.
<bullet> Proposed Sec. Sec. 429.605 and 429.610 would clarify when
off-label use would be considered for renegotiation eligibility and
selection by aligning the renegotiation eligibility and selection
policies for off-label use with the initial offer development process.
This clarification maintains consistency across CMS processes for
negotiation and renegotiation, as required by section 1194(f)(4)(B) of
the Act.
Unless otherwise specified, CMS proposes that the provisions herein
would apply with respect to all initial price applicability years
beginning with initial price applicability year 2029, including, for
example, with respect to the selection of drugs and the negotiation or
renegotiation of MFPs for initial price applicability year 2029 that
will take place during calendar year 2027. In this proposed rule,
unless otherwise specified, references hereinafter to ``the Negotiation
Program Guidance'' are to the most recent program guidance published by
CMS, which is the Medicare Drug Price Negotiation Program: Final
Guidance, Implementation of Sections 1191-1198 of the Act for Initial
Price Applicability Year 2028 and Manufacturer Effectuation of the
Maximum Fair Price in 2026, 2027, and 2028 that was published on
September 30, 2025.
CMS anticipates publishing the final version of this rule in Fall
2026, after considering and responding to public comments received on
this proposed rule, such that the final requirements will apply to
initial price applicability year 2029 and all subsequent years, taking
effect beginning with the process of the selection of drugs for
negotiation and renegotiation, if applicable, for initial price
applicability year 2029.
Given that the identification and selection of drugs for
negotiation and renegotiation occurs more than 2 years before the first
application of the MFP (that is, before the start of the selected
drug's first initial price applicability year), the processes for drugs
that were selected for negotiation for initial price applicability
years 2026, 2027, and 2028 and for renegotiation for initial price
applicability year 2028 will be at varying stages of implementation
when this rule is proposed and finalized. Consistent with the program
instruction requirement at sections 11001(c) and 11002(c) of the IRA,
the program guidance issued by CMS for initial price applicability
years 2026, 2027, and 2028 remains applicable and is not superseded by
this proposed rule with respect to such years. In other words, because
sections 11001(c) and 11002(c) of the IRA require CMS to implement the
Negotiation Program for initial price applicability years 2026, 2027,
and 2028 through program instruction and other forms of program
guidance, the requirements for a selected drug that was included on the
list of selected drugs with respect to initial price applicability year
2026, 2027, or 2028 are set forth with respect to such years in the
applicable program guidance. Revisions to the implementation of policy
for 2026, 2027, and 2028 with respect to drugs selected for initial
price applicability years 2026, 2027, and 2028 would be addressed by
CMS through publication of revised guidance. In accordance with the
expiration of the statutory program instruction requirement at the end
of 2028, CMS proposes that the provisions herein, as applicable, will
apply starting in 2029 with respect to the drugs selected for initial
price applicability years of 2026, 2027, or 2028.
Finally, CMS reminds interested parties that the exclusion for
small biotech drugs from what is otherwise a negotiation-eligible drug
under section 1192(d)(2) of the Act ended in initial price
applicability year 2028 and is, therefore, not codified in this rule.
However, the definition of an eligible small biotech drug for purposes
of the calculation of the temporary floor on the maximum fair price for
small biotech drugs under section 1194(d) of the Act is included in
this proposed rule (as described in more detail in section II.E.2. of
this proposed rule).
3. Summary of Costs and Benefits
We are proposing new policies for the Negotiation Program as
follows: a modification to the general fixed combination drug policy to
clarify our treatment of certain new formulations; clarification for
drugs that formerly qualified for the orphan drug exclusion; revisions
regarding process and schedule of CMS review of information in making
the determination for Bona Fide Marketing; additional details related
to the Primary Manufacturer transfer of responsibility for all
requirements of the Negotiation Program Agreement to an acquiring
entity; calculation of the 30-day equivalent supply for a selected drug
that is typically administered one time; implementation of the
Temporary Floor for Small Biotech Drugs for initial price applicability
years 2029 and 2030; and clarification of off-label use in
consideration for renegotiation eligibility and selection. In summary,
the effects of the IRA are to reduce government expenditures for Part
B, to increase expenditures for Part D through 2030, and to decrease
Part D expenditures beginning in 2031. For a detailed discussion of the
economic impacts, see section V. of this proposed rule.
B. Background
Sections 11001 and 11002 of the Inflation Reduction Act of 2022
(IRA) (Pub. L. 117-169), signed into law on August 16, 2022, establish
the Medicare Drug Price Negotiation Program (hereinafter the
``Negotiation Program'') to negotiate maximum fair prices (MFPs) for
certain high expenditure, single source drugs and biological products.
Specifically, in accordance with section 1191(c)(3) of the Act, MFP
means, with respect to a year during a price applicability period and
with respect to a selected drug (as defined in section 1192(c) of the
Act) with respect to such period, the price negotiated pursuant to
section 1194 of the Act, and updated pursuant to section 1195(b) of the
Act, as applicable, for such drug and year. The requirements for this
program are described in sections 1191 through 1198 of the Act, as
added by sections 11001 and 11002 of the IRA and as amended by section
71203 of the ``Working Families Tax Cut'' legislation (Pub. L. 119-21).
Under the IRA, with respect to each initial price applicability
year, CMS shall: (1) publish a list of selected drugs in accordance
with section 1192 of the Act; (2) enter into agreements with
manufacturers of selected drugs in accordance with section 1193 of the
Act; (3) negotiate MFPs for such selected drugs in accordance with
section 1194 of the Act; (4) publish MFPs for selected drugs in
accordance with section 1195 of the Act; (5) carry out administrative
duties and compliance monitoring in accordance with section 1196 of the
Act; and (6) impose civil monetary penalties (CMPs) in accordance with
section 1197 of the Act. With respect to initial price applicability
year 2028 and subsequent years, in accordance with section 1194(f) of
the Act, CMS shall also: (1) determine renegotiation-eligible drugs;
(2) determine whether to select drugs for renegotiation; and (3)
renegotiate the MFP for any drug selected for renegotiation. To the
extent applicable, any references in this proposed rule to the ``MFP''
include a renegotiated MFP.
[[Page 36238]]
Section 1198 of the Act establishes certain limitations on
administrative and judicial review relevant to the Negotiation Program.
Additionally, on July 4, 2025, the ``Working Families Tax Cut''
legislation was signed into law. Section 71203(a)(2) of the ``Working
Families Tax Cut'' legislation amended section 1192(e)(1)(3)(A) of the
Act to modify the requirements for a drug to qualify for the Orphan
Drug Exclusion. Section 71203(a)(3) of the ``Working Families Tax Cut''
legislation also added new section 1192(e)(4) of the Act, which
describes the treatment of former orphan drugs.
For the first year of the Negotiation Program, the Secretary of the
U.S. Department of Health and Human Services (``the Secretary'')
selected 10 high expenditure, single source drugs covered under Part D
for negotiation. The negotiated MFPs for these drugs took effect in
initial price applicability year 2026.\2\ The Secretary selected an
additional 15 drugs covered under Part D for negotiation for initial
price applicability year 2027,\3\ and 15 drugs covered under Part D
and/or payable under Part B for initial price applicability year
2028.\4\ The Secretary will select up to 20 drugs covered under Part D
and/or payable under Part B for initial price applicability year 2029
and subsequent initial price applicability years. Beginning with
initial price applicability year 2028, the Secretary could also select
drugs from initial price applicability year 2026 and subsequent initial
price applicability years for renegotiation. The Secretary selected one
drug for renegotiation for initial price applicability year 2028.\5\
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\2\ See: <a href="https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf">https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf</a>.
\3\ See: <a href="https://www.cms.gov/files/document/fact-sheet-negotiated-prices-ipay-2027.pdf">https://www.cms.gov/files/document/fact-sheet-negotiated-prices-ipay-2027.pdf</a>.
\4\ See: <a href="https://www.cms.gov/files/zip/selected-drug-list-negotiated-prices-also-known-maximum-fair-prices-statutezip.zip">https://www.cms.gov/files/zip/selected-drug-list-negotiated-prices-also-known-maximum-fair-prices-statutezip.zip</a>.
\5\ See: <a href="https://www.cms.gov/files/document/factsheet-medicare-negotiation-selected-drug-list-ipay-2028.pdf">https://www.cms.gov/files/document/factsheet-medicare-negotiation-selected-drug-list-ipay-2028.pdf</a>.
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For initial price applicability years 2026 through 2028 of the
Negotiation Program, sections 11001(c) and 11002(c) of the IRA direct
CMS to implement the Negotiation Program through program instruction
and other forms of program guidance. CMS issued initial or draft
versions of program guidance for each initial price applicability year
2026,\6\ 2027,\7\ and 2028 \8\ and requested public comment on each
version. CMS then issued a revised or final version of the guidance for
each of these program years.<SUP>9 10 11</SUP> This proposed rule
proposes to codify these requirements at parts 423 and 429 to title 42,
chapter IV of the Code of Federal Regulations to implement sections
11001 and 11002 of the IRA. The effective date of the proposed
provisions are discussed in section I.A.2. of this proposed rule.
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\6\ See: <a href="https://www.cms.gov/files/document/medicare-drug-price-negotiation-program-initial-guidance.pdf">https://www.cms.gov/files/document/medicare-drug-price-negotiation-program-initial-guidance.pdf</a>.
\7\ See: <a href="https://www.cms.gov/files/document/medicare-drug-price-negotiation-draft-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf">https://www.cms.gov/files/document/medicare-drug-price-negotiation-draft-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf</a>.
\8\ See: <a href="https://www.cms.gov/files/document/ipay-2028-draft-guidance.pdf">https://www.cms.gov/files/document/ipay-2028-draft-guidance.pdf</a>.
\9\ See: <a href="https://www.cms.gov/files/document/revised-medicare-drug-price-negotiation-program-guidance-june-2023.pdf">https://www.cms.gov/files/document/revised-medicare-drug-price-negotiation-program-guidance-june-2023.pdf</a>.
\10\ See: <a href="https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf">https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf</a>.
\11\ See: <a href="https://www.cms.gov/files/document/ipay-2028-final-guidance.pdf">https://www.cms.gov/files/document/ipay-2028-final-guidance.pdf</a>.
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Consistent with the program instruction requirement of sections
11001(c) and 11002(c) of the IRA, CMS will issue program guidance
related to manufacturer effectuation of the MFP for 2028, including
with respect to drugs payable under Part B. CMS intends to codify
requirements related to MFP effectuation for 2029 and subsequent years
in future rulemaking. CMS stated in the Negotiation Program Guidance
its intent to codify MFP effectuation policies for 2029 and subsequent
years after guidance for 2028 has been finalized.
C. Severability of Provisions
Finally, CMS is clarifying and emphasizing its intent that if any
provision of this rule, once finalized, is held to be invalid or
unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, it shall be
severable from this rule and not affect the remainder thereof or the
application of the provision to other persons not similarly situated or
to other, dissimilar circumstances. Through this rule, CMS proposes
provisions that are intended to and will operate independently of each
other, even if each serves the same general purpose or policy goal.
Where a provision is necessarily dependent on another, the context
generally makes that clear (such as by a cross-reference to apply the
same standards or requirements).
II. Proposed Requirements for the Medicare Drug Price Negotiation
Program
A. General Provisions
1. Basis and Scope (Sec. 429.10)
In proposed Sec. 429.10, we would state that part 429 implements
sections 1191 through 1198 of the Act and sections 11001 and 11002 of
the IRA, which set forth the requirements of the Medicare Drug Price
Negotiation Program. The Medicare Drug Price Negotiation Program
requires the Secretary to negotiate and renegotiate, for applicable
periods, Medicare prices for certain high expenditure, single source
drugs and biological products.
Additionally, in proposed Sec. 429.10(c), we would state that,
were any provision of part 429 to be held invalid or unenforceable by
its terms, or as applied to any person or circumstance, such provision
would be severable from part 429 and the invalidity or unenforceability
would not affect the remainder thereof or any other part of this
subchapter or the application of such provision to other persons not
similarly situated or to other, dissimilar circumstances. While the
provisions in part 429 are intended to present a comprehensive approach
to implementing the Medicare Drug Price Negotiation Program, we intend
that each of them is a distinct, severable provision, as proposed.
Through this rulemaking, the proposed policies contained herein are
intended to operate independently of each other, even if each serves
the same general purpose or policy goal. For example, we intend that
the proposed policies related to requests for a biosimilar delay
(proposed Sec. 429.110) are distinct and severable from the proposals
related to the identification of qualifying single source drugs
(proposed Sec. 429.125). As another example, we intend that the
proposed policy for additional price exchange opportunities for
purposes of providing additional flexibility to extend and consider
offers and counteroffers (proposed Sec. 429.530) is distinct and
severable from the proposals for CMS and Primary Manufacturers (as
defined in proposed Sec. 429.20) to submit written initial offers and
statutory written counteroffers, respectively, for purposes of
determining an agreed-upon maximum fair price (MFP) (proposed Sec.
429.520(a) and 429.525(a), respectively). Even where one provision
makes reference to a second provision, Sec. 429.10(c) clarifies the
intent of the agency is that the two provisions would be severable if
one provision were to be invalidated in whole or in part. For
[[Page 36239]]
example, we would still be able to adjust the preliminary price based
on section 1194(e)(1) factors (as defined in proposed Sec. 429.20) as
described in proposed Sec. 429.510(f) even if the provision for
Primary Manufacturers to submit market data and revenue and sales
volume data for the selected drug in the United States is deemed
invalid (proposed Sec. 429.505(b)(2)(v)).
2. Definitions (Sec. 429.20)
In this proposed rule, we would codify the definitions of terms
consistent with the meanings given in sections 1191 through 1198 of the
Act or established in the Negotiation Program Guidance, as applicable,
as well as proposing to codify new definitions based on policies
detailed in this proposed rule.
a. Additional Delay Request
We propose to define ``Additional Delay Request'' as a request to
delay the inclusion on the selected drug list of a reference drug for
which an initial delay request has been granted for a second initial
price applicability year consistent with proposed Sec. 429.110 and
section 1192(f)(1)(B)(i)(II) of the Act.
b. Applicable Program Agreement
We propose to define ``applicable program agreement'' as an
agreement under the Manufacturer Discount Program as specified in
section 1860D-14C of the Act or a rebate agreement described in section
1927(b) of the Act.
c. Authorized Generic Drug
We propose to define ``authorized generic drug'' in accordance with
the definition of such term at section 1192(e)(2)(B) of the Act.
Section 1192(e)(2)(B)(i) of the Act defines an ``authorized generic
drug'' that is a drug as a drug as defined in section 505(t)(3) of the
Federal Food, Drug, and Cosmetic (FD&C) Act. Section 1192(e)(2)(B)(ii)
of the Act defines an authorized generic drug that is a biological
product as a product that has been licensed under section 351(a) of the
Public Health Service (PHS) Act and is marketed, sold, or distributed
directly or indirectly to the retail class of trade under a different
labeling, packaging (other than repackaging as the reference product in
blister packs, unit doses, or similar packaging for institutions),
product code, labeler code, trade name, or trademark than the reference
product.
d. Authorized Representative
We propose to define ``authorized representative'' as an individual
that has the authority or capacity to legally bind the Primary
Manufacturer to the terms and conditions of the Negotiation Program
Agreement and meets one of the following criteria:
<bullet> Chief Executive Officer of the Primary Manufacturer.
<bullet> Chief Financial Officer of the Primary Manufacturer.
<bullet> An individual with equivalent authority to a Chief
Executive Officer or Chief Financial Officer of the Primary
Manufacturer.
<bullet> An individual that has been granted delegation of
signature authority on behalf of one of the individuals specified in
paragraphs (1) through (3) of this proposed definition.
We solicit comment on this proposed definition and potential
alternative formulations, including whether to adopt a broader
definition to account for other contexts within the Negotiation
Program, such as an individual making a submission to CMS on behalf of
an entity other than a Primary Manufacturer.
e. Average Manufacturer Price (AMP)
We propose to define ``average manufacturer price (AMP)'' as having
the meaning given such term in section 1927(k)(1) of the Act.
f. Average Non-Federal Average Manufacturer Price (non-FAMP)
We propose to define ``average non-Federal Average Manufacturer
Price (non-FAMP)'' as having the meaning set forth in section
1194(c)(6) of the Act.
g. Average Sales Price (ASP)
We propose to define ``average sales price (ASP)'' as the
manufacturer's price for a quarter for a drug represented by a
particular 11-digit National Drug Code (NDC-11) determined under Sec.
414.804 and as reported in section 1927(b)(3) of the Act.
h. Billing Unit
We propose to define ``billing unit'' as the identifiable quantity
of a drug or biological product associated with a billing and payment
code (for example, a Healthcare Common Procedure Coding System code),
as established by CMS.
i. Biologics Licenses Application (BLA)
We propose to define ``Biologics License Application (BLA)'' as an
application submitted under section 351 of the PHS Act.
j. Biosimilar Biological Product or Biosimilar
We propose to define ``biosimilar biological product'' or
``biosimilar'' as having the meaning given such term in section
1847A(c)(6) of the Act. For purposes of these regulations, we use the
terms ``biosimilar biological product'' and ``biosimilar''
interchangeably when describing the requirements of sections 11001 and
11002 of the IRA. Specifically, section 1192(f)(5) of the Act, as added
by section 11002 of the IRA, uses the meaning given to ``biosimilar
biological product'' from section 1847A(c)(6) of the Act. Proposed part
429 uses the term ``biosimilar'' unless otherwise specified, such as
related to the ``Biosimilar'' included in a Biosimilar Delay Request
under section 11002 of the IRA in proposed Sec. 429.20.
k. Biosimilar Delay Request
We propose to define ``Biosimilar Delay Request'' as either an
Initial Delay Request or an Additional Delay Request.
l. Biosimilar Manufacturer
We propose to define ``Biosimilar Manufacturer'' as one of the
following:
<bullet> The BLA holder for the Biosimilar.
<bullet> If a BLA has been submitted to the U.S. Food and Drug
Administration (FDA) for review but the Biosimilar has not been
licensed, the sponsor of the BLA submitted for review by the FDA.
<bullet> If the Biosimilar has not been licensed and the BLA has
not been submitted to the FDA, the organization planning to be the
sponsor when the BLA is submitted for review by the FDA.
We believe that this approach is appropriate because: (1) it
clearly identifies one manufacturer that may submit a Biosimilar Delay
Request for a given Biosimilar, avoiding the possibility that we would
receive two such requests naming the same Biosimilar for the same
initial price applicability year; and (2) the status of the application
for licensure for the Biosimilar is material to CMS' consideration of a
request for a Biosimilar Delay Request, as described in section II.B.3.
of this proposed rule.
m. BLA Holder
We propose to define ``BLA holder'' as the entity that is the
holder of the license(s) permitting marketing of a biological product
in accordance with section 351 of the PHS Act.
n. Bona Fide Marketing
We propose to define ``Bona Fide Marketing'' as having the meaning
set forth in proposed Sec. 429.130(a). Further discussion of CMS'
review of one or more manufacturers of an approved generic drug or
licensed biosimilar engaging in Bona Fide Marketing is included in
section II.B.6.d. of this proposed rule.
[[Page 36240]]
o. Combined Part B and Part D Amount
We propose to define ``combined Part B and Part D amount'' as an
amount equal to the weighted average of the payment amount under
section 1847A(b)(4) of the Act and the sum of the plan-specific
enrollment weighted amount as determined by CMS under proposed Sec.
429.420(c).
p. CPI-U
We propose to define ``CPI-U'' as the monthly Consumer Price Index
for All Urban Consumers (United States city average) index level for
all items from the Bureau of Labor Statistics.
q. Direct and Indirect Remuneration (DIR)
We propose to define ``Direct and Indirect Remuneration (DIR)'' as
having the meaning set forth in 42 CFR 423.308.
r. Drug Covered Under Part D
We propose to define ``drug covered under Part D'' as a covered
part D drug as defined in section 1860D-2(e) of the Act. We acknowledge
that section 1860D-2(e) of the Act defines the term ``covered part D
drug'' rather than ``drug covered under Part D''. For purposes of this
rule, we use the term ``drug covered under Part D'' for simplicity and
intend this term to be synonymous with the statutory term ``covered
part D drug''.
s. Drug Payable Under Part B
We propose to define ``drug payable under Part B'' as a drug or
biological product for which payment may be made under part B of Title
XVIII of the Act.
t. Estimated Remuneration at Point-of-Sale Amounts (ERPOSA)
We propose to define ``estimated renumeration at point-of-sale
amounts (ERPOSA)'' as the estimated amount of rebates or other price
concessions that the Part D plan sponsor is required to apply, or has
elected to apply, to the negotiated price as a reduction in the drug
price made available to the beneficiary at the point of sale.
u. Extended-Monopoly Drug
We propose to define ``extended-monopoly drug'' as having the
meaning set forth in section 1194(c)(4) of the Act.
v. FDA-Approved Indication
We propose to define ``FDA-approved indication'' as the information
included in drug labeling per 21 CFR 201.57(c)(2) or FDA regulation(s)
as applicable.
w. Fixed Combination Drug
We propose to define ``fixed combination drug'' as having the
meaning set forth in 21 CFR 300.50.
x. Generic Drug
We propose to define ``generic drug'' as a drug approved in an
Abbreviated New Drug Application (ANDA) under section 505(j) of the
Federal Food, Drug, and Cosmetic Act (``FD&C Act'').
y. Healthcare Common Procedure Coding System (HCPCS) Code
We propose to define ``Healthcare Common Procedure Coding System
(HCPCS) code'' as a billing and payment code, as established by CMS for
payment under Part B, used to describe a drug or biological and for
which CMS may publish a payment amount.
z. High Likelihood Deadline
We propose to define ``High Likelihood Deadline'' as the date that
is 2 years after the statutorily defined selected drug publication date
for the initial price applicability year for which the reference drug
would be included on the selected drug list absent a successful Initial
Delay Request. This period of time is consistent with time periods
specified in sections 1192(f)(1)(A) and (2)(B)(i)(I) of the Act.
aa. Initial Delay Period
We propose to define ``Initial Delay Period'' as the time period
between: (1) the selected drug publication date for the initial price
applicability year for which the Reference Drug otherwise would have
been included on the selected drug list but for the successful Initial
Delay Request, as proposed in Sec. 429.110(g); and (2) the selected
drug publication date with respect to the initial price applicability
year that is 1 year after the initial price applicability year for
which the Reference Drug otherwise would have been included on the
selected drug list but for the successful Initial Delay Request as set
forth in section 1192(f)(2) of the Act.
ab. Initial Delay Request
We propose to define ``Initial Delay Request'' as a request to
delay the inclusion of a reference drug on the selected drug list by
one initial price applicability year consistent with proposed Sec.
429.110(c) and section 1192(f)(1)(B)(i)(I) of the Act.
ac. Initial Price Applicability Year
We propose to define ``initial price applicability year'' as having
the meaning set forth in section 1191(b)(1) of the Act.
ad. Knowingly
We propose to define ``knowingly'' as having the meaning set forth
in 42 CFR 1003.110.
ae. Long-Monopoly Drug
We propose to define ``long-monopoly drug'' as having the meaning
set forth in section 1194(c)(5) of the Act.
af. Manufacturer
We propose to define ``manufacturer'' as having the meaning set
forth in section 1191(c)(1) of the Act.
ag. Manufacturer Discount Program
We propose to define ``Manufacturer Discount Program'' to mean the
Medicare Part D Manufacturer Discount Program established under section
1860D-14C of the Act.
ah. Maximum Fair Price (MFP)
We propose to define ``maximum fair price (MFP)'' as having the
meaning set forth in section 1191(c)(3) of the Act.
ai. Medicare Drug Price Negotiation Program (or Negotiation Program)
We propose to define ``Medicare Drug Price Negotiation Program (or
Negotiation Program)'' as the program created by sections 11001 and
11002 of the Inflation Reduction Act and codified in sections 1191
through 1198 of the Act and as amended.
aj. Medicare Drug Price Negotiation Program Agreement (or Negotiation
Program Agreement)
We propose to define ``Medicare Drug Price Negotiation Program
Agreement (or Negotiation Program Agreement)'' as the agreement between
a Primary Manufacturer and CMS as set forth in proposed Sec. 429.200
of this chapter and section 1193(a) of the Act.
ak. NDA Holder
We propose to define ``NDA holder'' as the entity that is the
holder of the approval(s) to market a drug product in accordance with
section 505(c) of the FD&C Act.
al. Negotiation-Eligible Drug
We propose to define ``negotiation-eligible drug'' as having the
meaning set forth in section 1192(d) of the Act. We refer readers to
proposed Sec. 429.115 (and related discussion in section II.B.4. of
this proposed rule) for CMS' proposals for identifying drugs that meet
this statutory definition.
am. Negotiation Period
We propose to define ``negotiation period'' as having the meaning
set forth in section 1191(b)(4) of the Act.
[[Page 36241]]
an. Net Part D Plan Payment and Beneficiary Liability
We propose to define ``Net Part D Plan Payment and Beneficiary
Liability'' as, for purposes of the Medicare Drug Price Negotiation
Program, the total gross covered prescription drug cost for a selected
drug covered under Part D net of direct and indirect remuneration (DIR)
and Manufacturer Discount Program payments and excluding prescription
drug event (PDE) records for which a compound code indicates the PDE
record is for a compounded drug.
ao. New Drug Application (NDA)
We propose to define ``New Drug Application (NDA)'' as an
application submitted under section 505(b) of the FD&C Act.
ap. Off-Label Use
We propose to define ``off-label use'' as the use for a condition
for a selected drug or therapeutic alternative that is not an FDA-
approved indication but is included in evidence-based clinical practice
guidelines and is a medically accepted indication payable under Part B
or covered under Part D or both, taking into consideration major drug
compendia, authoritative medical literature, and accepted standards of
medical practice, or some combination thereof.
aq. Orphan Drug Designation
We propose to define ``orphan drug designation'' as the meaning set
forth in 21 CFR 316.3(b)(11).
ar. Outcomes
We propose to define ``outcomes'' as the impact of an intervention,
which may be clinical or related to the functioning, symptoms, quality
of life, or other aspects of a patient's life.
as. Part B Data
We propose to define ``Part B data'' as having the meaning of
Original Medicare (OM) Part B claims data and Medicare Advantage (MA)
encounter data for Part B items or services.
at. Partnership
We propose to define ``partnership'' as having the meaning set
forth in section 1192(f)(1)(C)(ii) of the Act.
au. Personally Identifiable Information (PII)
We propose to define ``personally identifiable information (PII)''
as having the meaning set forth at 2 CFR 200.1.
av. Plasma-Derived Product
We propose to define ``plasma-derived product'' as having the
meaning set forth in section 1192(e)(3)(C) of the Act.
aw. Preliminary Price
We propose to define ``preliminary price'' as the numerical dollar
amount used by CMS in developing an initial offer in accordance with
Sec. 429.510(e) by adjusting the starting point of a selected drug
based on section 1194(e)(2) factors.
ax. Price Applicability Period
We propose to define ``price applicability period'' as having the
meaning set forth in section 1191(b)(2) of the Act.
ay. Primary Manufacturer
We propose to define ``Primary Manufacturer'' as the manufacturer
identified by CMS as the NDA holder or the BLA holder for the selected
drug.
az. Private Label Distributor
We propose to define ``private label distributor'' as having the
meaning set forth in 21 CFR 207.1.
ba. Protected Health Information (PHI)
We propose to define ``protected health information (PHI)'' as
having the meaning set forth at 45 CFR 160.103.
bb. Qualifying Single Source Drug
We propose to define ``qualifying single source drug'' as having
the meaning set forth in section 1192(e) of the Act. We refer readers
to proposed Sec. 429.125 (and related discussion in section II.B.6. of
this proposed rule) for CMS' proposals for identifying drugs that meet
this statutory definition.
bc. Rare Disease or Condition
Section 1192(e)(3)(A) of the Act describes ``rare disease or
condition'' as having the definition used for such term in section
526(a)(2) of the FD&C Act. Therefore, we propose to define ``rare
disease or condition'' as having the meaning set forth in section
526(a)(2) of the FD&C Act.
bd. Reference Drug
We propose to define ``Reference Drug'' as a negotiation-eligible
drug that includes the reference product for the biosimilar as
described in section 1192(f)(1)(B) of the Act.
be. Reference Manufacturer
We propose to define ``Reference Manufacturer'' as the Primary
Manufacturer of the Reference Drug that is named in a Biosimilar Delay
Request.
bf. Reference Product
We propose to define ``Reference Product'' as having the meaning
set forth in section 1191(c)(4) of the Act.
bg. Relabeler
We propose to define ``relabeler'' as having the meaning set forth
in 21 CFR 207.1.
bh. Renegotiation-Eligible Drug
We propose to define ``renegotiation-eligible drug'' as having the
meaning set forth in section 1194(f)(2) of the Act.
bi. Repackager
We propose to define ``repackager'' as having the meaning given the
term ``repacker'' set forth in 21 CFR 207.1.
bj. Request To Terminate
We propose to define ``Request to Terminate'' as a written request
submitted by a Primary Manufacturer to CMS, that CMS determines meets
the conditions described in Sec. 429.205(b)(1)(A) and (B), to request
termination of its applicable program agreements in the context of a
Primary Manufacturer's decision not to enter into or to terminate a
Negotiation Program Agreement.
bk. Secondary Manufacturer
We propose to define ``Secondary Manufacturer'' as a manufacturer
of a drug product included in the selected drug, that is not the
Primary Manufacturer for the selected drug, and that either: (1) is
listed as a manufacturer in an NDA or BLA for the selected drug; or (2)
markets the selected drug pursuant to an agreement with the Primary
Manufacturer but is not listed on an NDA or BLA of the selected drug. A
Secondary Manufacturer includes any manufacturer of any authorized
generic drug(s) and any repackager or relabeler of the selected drug
that meet either of these criteria.
bl. Second Delay Period
We propose to define ``Second Delay Period'' as the time period
between (1) the publication date of the selected drug list for initial
price applicability year that is 1 year after the initial price
applicability year for which the Reference Drug would have been
included on the selected drug list but for the successful Initial Delay
Request and (2) the publication date of the selected drug list for
initial price applicability year that is 2 years after the initial
price applicability year for which the Reference Drug would have been
included on the selected drug list but for the successful Initial Delay
[[Page 36242]]
Request as set forth in section 1192(f)(2) of the Act.
bm. Section 1194(e)(1) Factors
We propose to define ``section 1194(e)(1) factors'' as the factors
described in section 1194(e)(1) of the Act.
bn. Section 1194(e)(2) Factors
We propose to define ``section 1194(e)(2) factors'' as the factors
described in section 1194(e)(2) of the Act.
bo. Selected Drug
We propose to define ``selected drug'' as having the meaning set
forth in section 1192(c) of the Act. We refer readers to proposed Sec.
429.105 (and related discussion in section II.B.2. of this proposed
rule) for CMS' proposals for identifying drugs that meet this statutory
definition.
bp. Selected Drug Publication Date
We propose to define ``selected drug publication date'' as having
the meaning set forth in section 1191(b)(3) of the Act.
bq. Self-Administered Drug
We propose to define ``self-administered drug'' to mean, a drug or
biological that is identified by the U.S. Department of Health and
Human Services Office of Inspector General (OIG) as a self-administered
drug pursuant to section 1847A(g)(1) of the Act.
br. Sequestration Payment Adjustment
We propose to define ``sequestration payment adjustment'' to mean,
when applicable, the amount that is applied to a Part B claim to
determine the Medicare payment amount--after determining coinsurance,
deductible, merit-based incentive payment adjustments, and any
applicable Medicare Secondary Payment adjustments.
bs. Small Biotech Drug
We propose to define ``Small Biotech Drug'' as meaning a drug that
is determined by CMS under the proposed Sec. 429.440(b)(2), in
accordance with section 1192(d)(2) of the Act, as eligible for the
Temporary Floor for Small Biotech Drugs.
bt. Specified Manufacturer
We propose to define ``Specified Manufacturer'' as having the
meaning set forth in section 1860D-14C(g)(4)(B)(ii) of the Act, as
determined by CMS for the purposes of the Manufacturer Discount Program
in accordance with Sec. Sec. 423.2716, 423.2720, and 423.2724.
bu. Starting Point
We propose to define ``starting point'' as the numerical dollar
amount used by CMS in developing an initial offer in accordance with
proposed Sec. 429.510(d) that is then adjusted by CMS based on section
1194(e)(2) factors to determine the preliminary price, per the process
described in proposed Sec. 429.510(e).
bv. Temporary Floor for Small Biotech Drugs
We propose to define ``Temporary Floor for Small Biotech Drugs'' as
having the meaning set forth in Sec. 429.440(b)(3). We refer readers
to proposed Sec. 429.440(b)(1) and (2) (and related discussion in
section II.E.9.b. of this proposed rule) for CMS' proposals for the
process for a Primary Manufacturer to request consideration and CMS'
determination of eligibility for the Temporary Floor for Small Biotech
Drugs.
bw. Therapeutic Advance
We propose to define ``therapeutic advance'' as a demonstrated
improvement in one or more outcomes or other clinical considerations
for each identified condition of a selected drug as compared to its
therapeutic alternative(s). For purposes of the Negotiation Program,
anytime CMS considers therapeutic advance, CMS would consider the
extent to which the drug represents a therapeutic advance at the time
of consideration based on all available information at such time of
consideration
bx. Therapeutic Alternative
We propose to define ``therapeutic alternative'' as a
pharmaceutical product or group of pharmaceutical products other than
the selected drug that may be used to treat the same condition or
disease state as the selected drug.
by. Total Allowed Charges
We propose to define ``total allowed charges'' as the amount that
is inclusive of the beneficiary coinsurance and Medicare payment for
the covered Part B item or service paid for under part B of Title XVIII
of the Act, without a sequestration payment adjustment applied.
bz. Total Expenditures
We propose to define ``total expenditures'' as having the meaning
set forth in section 1191(c)(5) of the Act. We refer readers to Sec.
429.120 and section II.B.5. of this proposed rule for CMS' proposals
for calculating total expenditures under Part D and total expenditures
under Part B that meet this statutory definition.
ca. Total Expenditures Measurement Period
Sections 1192(d)(1)(A) and (d)(1)(B) of the Act require that CMS
calculate total expenditures under Part D and Part B, respectively,
using data from the most recent 12-month period for which data are
available prior to the selected drug publication date with respect to
an initial price applicability year, but ending no later than October
31 of the year prior to the year of such drug publication date. To
describe this 12-month period, we propose to define ``total
expenditures measurement period'' as the 12-month period ending on
October 31 of the year prior to the year of the selected drug
publication date with respect to an initial price applicability year.
cb. Total Gross Covered Prescription Drug Costs
Section 1191(c)(5) of the Act specifies that the term ``total gross
covered prescription drugs costs'' is defined at section 1860D-15(b)(3)
of the Act. The term ``total gross covered prescription drug costs''
does not appear at section 1860D-15(b)(3) of the Act, but section
1860D-15(b)(3) of the Act does define the term ``gross covered
prescription drug costs,'' and Sec. 423.308 codifies this term. We
therefore propose to define ``total gross covered prescription drug
costs'' as having the meaning given the term ``gross covered
prescription drug costs'' set forth at 42 CFR 423.308.
cc. Unit
We propose to define ``unit'' as having the meaning set forth in
section 1191(c)(6) of the Act.
cd. Unmet Medical Need
We propose to define ``unmet medical need'' as a circumstance in
which the relevant disease or condition is one for which no other
treatment options exist, or existing treatments do not adequately
address the disease or condition. For purposes of the Negotiation
Program, anytime CMS considers an unmet medical need, CMS would
consider the extent to which the drug addresses an unmet medical need
at the time of consideration based on all available information at such
time of consideration.
ce. Wholesale Acquisition Cost (WAC) Unit Price
We propose to define ``Wholesale Acquisition Cost (WAC) unit
price'' as the manufacturer's list price for the drug or biological
product to wholesalers or
[[Page 36243]]
direct purchasers in the United States, not including prompt pay or
other discounts, rebates or reductions in price, for the most recent
month for which the information is available, as reported in wholesale
price guides or other publications of drug or biological product
pricing data (as defined in section 1847A(c)(6)(B) of the Act). The WAC
unit price is reported at the NDC-11 level.
3. Limitation on Review (Sec. 429.30)
Section 1198 of the Act establishes that there shall be no
administrative or judicial review of any of the following: (1) the
determination of a unit, with respect to a drug or biological product,
pursuant to section 1191(c)(6) of the Act; (2) the selection of drugs
under section 1192(b) of the Act, the determination of negotiation-
eligible drugs under section 1192(d) of the Act, the determination of
qualifying single source drugs under section 1192(e) of the Act, and
the application of the Biosimilar Delay under section 1192(f) of the
Act; (3) the determination of a MFP under subsection (b) or (f) of
section 1194 of the Act; and (4) the determination of renegotiation-
eligible drugs under section 1194(f)(2) of the Act and the selection of
renegotiation-eligible drugs under section 1194(f)(3) of the Act. CMS
proposes to codify these limitations on review in proposed Sec.
429.30.
B. Identification of Selected Drugs (Sec. Sec. 429.100 Through
429.135)
Section 1192 of the Act establishes the requirements governing the
publication of the list of selected drugs for an initial price
applicability year, the identification of selected drugs, ranking of
negotiation-eligible drugs, and the identification of qualifying single
source drugs. With respect to initial price applicability years 2026
through 2028, we implemented these requirements through guidance,
including, for example with respect to initial price applicability year
2028, section 30 of the Negotiation Program Guidance. With respect to
initial price applicability years beginning with initial price
applicability year 2029, we are proposing to codify these steps in an
order reflecting the sequence of the statutory provisions which these
sections are implementing, with proposed revisions as noted in this
section, in proposed Sec. Sec. 429.100 through 429.135.
Beginning with respect to initial price applicability year 2029 and
in accordance with section 1192 of the Act, we propose in Sec. Sec.
429.100 through 429.135 to codify the policies for identification of
selected drugs described in sections 30 and 40.2 of the Negotiation
Program Guidance, subject to proposed modifications as noted herein. As
a matter of program operations, we would first identify qualifying
single source drugs with respect to each initial price applicability
year. As a part of this identification process, CMS would exclude
certain drugs as proposed in Sec. 429.125(e). Next, we would identify
negotiation-eligible drugs using total expenditures under Part B or
Part D of Title XVIII of the Act, as applicable and calculated as set
forth in proposed Sec. 429.120, to identify qualifying single source
drugs that are Part B high spend drugs, Part D high spend drugs, or
both, as proposed in Sec. 429.115. (In these steps, we would also
exclude drugs that are already selected drugs in accordance with
section 1192(d)(3) of the Act.) As proposed in Sec. 429.105(a), we
would rank these negotiation-eligible drugs for an initial price
applicability year according to the total expenditures for such drugs.
In accordance with section 1192(a) of the Act and subject to the
section 1192(f) of the Act (which permits the delay in the selection
and negotiation of biological products for biosimilar market entry when
certain requirements are met consistent with proposed Sec. 429.110,
hereinafter ``Biosimilar Delay''), we propose at Sec. 429.105(c) to
select up to 20 negotiation-eligible drugs with the highest total
expenditures under Part B and Part D of Title XVIII of the Act for
negotiation for initial price applicability year 2029 and each initial
price applicability year thereafter, and publish the list of selected
drugs as proposed at Sec. 429.100. We may also select a drug or drugs
for renegotiation based on criteria discussed in detail in section
II.G.3. of this proposed rule and in proposed Sec. 429.610.
Finally, as proposed in Sec. 429.100, we would publish the list of
drugs selected for negotiation, including the list of drugs selected
for renegotiation, if any, not later than the selected drug publication
date. We are also proposing to publish a list of the up to 30 top
negotiation-eligible drugs (including the up to 20 selected drugs)
ranked by combined total expenditures under Part B and Part D. Detailed
descriptions of these proposals for initial price applicability year
2029 and each initial price applicability year thereafter is included
later in this section. Figure 1 provides a visual depiction of this
proposed process.
Figure 1--Diagram of Proposed Process for Selecting Drugs for
Negotiation for Initial Price Applicability Years Beginning With
Initial Price Applicability Year 2029
[[Page 36244]]
[GRAPHIC] [TIFF OMITTED] TP16JN26.005
1. Publication of the Selected Drug List (Sec. 429.100)
Section 1192(a)(4) of the Act requires that, not later than the
selected drug publication date with respect to the initial price
applicability year, in accordance with section 1192(b) of the Act, the
Secretary shall select and publish a list of, with respect to the
initial price applicability year 2029 or a subsequent year, 20
negotiation-eligible drugs, as described in section 1192(d)(1) of the
Act, with respect to such year (or, all (if such number is less than
20) such negotiation-eligible drugs with respect to such year).
Proposed Sec. 429.20 defines the term ``selected drug publication
date'' to have the meaning set forth in section 1191(b)(3) of the Act,
which provides that the term ``selected drug publication date'' means,
with respect to each initial price applicability year, February 1 of
the year that begins 2 years prior to such year. With respect to
initial price applicability years 2026 through 2028, we implemented
these requirements through guidance, including, for example, section
30.4 of the Negotiation Program Guidance with respect to initial price
applicability year 2028.
We are proposing at Sec. 429.100(a) to codify the requirement at
section 1192(c)(1) of the Act that each drug included on the selected
drug list \12\ for an initial price applicability year is a selected
drug with respect to such initial price applicability year and each
subsequent year unless and until CMS makes a determination in
accordance with proposed Sec. 429.135(a) that such drug will be
deselected (as described in further detail in section II.B.6.d. of this
proposed rule). We are proposing at Sec. 429.100(b) to codify the
requirement that CMS publish the selected drug list and the drugs
selected for renegotiation, if any, for each initial price
applicability year beginning with initial price applicability year
2029, no later than the selected drug publication date with respect to
the initial price applicability year. For example, for initial price
applicability year 2029, we would publish this information no later
than February 1, 2027. As proposed in Sec. 429.100(b)(1), the selected
drug list would include the 20 (or all, if such number is less than 20)
drugs payable under Part B, covered under Part D, or both, selected for
negotiation for the initial price applicability year as determined in
Sec. 429.105(c) and discussed in section II.B.2 of this proposed rule.
As proposed in Sec. 429.100(b)(2), we would also publish the list of
drugs selected for renegotiation, if any, as set forth in proposed
Sec. 429.610.
---------------------------------------------------------------------------
\12\ CMS would publish one list with respect to each initial
price applicability year. The list would include the selected drug
list of the drugs selected for negotiation for the initial price
applicability year, as well as drugs selected for renegotiation, if
any.
---------------------------------------------------------------------------
For each selected drug, we are proposing at Sec. 429.100(b)(3)(i)
to add to the MFP file no later than the selected drug publication date
the active moiety, active ingredient, antigen component, or, in the
case of a potential qualifying single source drug identified under the
general fixed combination drug policy proposed at Sec. 429.125(b)(4),
the distinct combination of active moieties, active ingredients, or
antigen components,\13\ as applicable, identified as set forth in
proposed Sec. 429.125(b). For a potential qualifying single source
drug identified under Sec. 429.125(b)(4)(i), we are proposing to
publish the shared active moiety/active ingredient identified under
Sec. 429.125(b)(4)(i), plus any additional active moiety/active
ingredient included in new formulations of such potential qualifying
single source drug. We are proposing at Sec. 429.100(b)(4)(i) to take
the same approach for each drug selected for renegotiation, if any,
except we would publish the active moiety/active ingredient previously
identified for the initial price applicability year for which the drug
was originally selected for negotiation. We are proposing at Sec.
429.100(b)(3)(ii) and (b)(4)(ii) to add to the MFP file no later than
the selected drug publication date the NDC-11s identified in accordance
with Sec. 429.100(c)(1) and the corresponding NDC-9s and HCPCS codes,
as applicable, for the selected drug and the drug selected for
renegotiation, if any. For drugs selected for renegotiation, the NDC-
11s (and corresponding NDC-9s
[[Page 36245]]
and HCPCS codes) added to the MFP file would also reflect information
previously submitted by the Primary Manufacturer, including submissions
in accordance with proposed Sec. 429.100. At Sec. 429.100(c), we
propose the process we would use to identify the list of NDC-11s
described in the prior sentences for each selected drug and each drug
selected for renegotiation, if any. As proposed at Sec. 429.100(f),
the agency's list of NDC-11s would be used in the administration of the
Negotiation Program, including to identify the NDC-11s of the selected
drug that are subject to the negotiation process set forth in proposed
subpart F and the renegotiation process set forth in proposed subpart G
(as applicable), identify the NDC-11s of the selected drug to which the
MFP (if one is agreed to by CMS and the Primary Manufacturer) applies
for the price applicability period, to calculate the ceiling set forth
in proposed Sec. 429.410 for drugs selected for negotiation, to
calculate the ceiling set forth in proposed Sec. 429.620(b) for drugs
selected for renegotiation, and to calculate how to apply the MFP, if
one is agreed to by CMS and the Primary Manufacturer, and to the extent
data are available to support such calculations, across dosage forms
and strengths set forth in proposed Sec. 429.700 for selected drugs
and proposed Sec. 429.600(b)(2) for drugs selected for renegotiation.
---------------------------------------------------------------------------
\13\ For simplicity, we hereinafter use the term ``active
moiety/active ingredient'' to refer to the active moiety, active
ingredient, antigen component, or, in the case of a potential
qualifying single source drug identified under the general fixed
combination drug policy proposed at Sec. 429.125(b)(4), the
distinct combination of active moieties, active ingredients, or
antigen components, that we propose to identify as specified at
proposed Sec. 429.125(b)(1) through (b)(4). In limited cases, we
refer to active moieties, active ingredients, and antigen components
in the plural (that is, ``active moieties/active ingredients/antigen
components'' or ``active moiety(ies)/active ingredient(s)/antigen
component(s)) when we believe such terminology provides greater
clarity to the discussion.
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To identify the list of NDC-11s of the selected drug, including for
a drug selected for renegotiation, set forth at proposed Sec.
429.100(c), we propose at Sec. 429.100(c)(1) to first identify NDC-11s
associated with the NDA(s)/BLA(s) of the selected drug. We would
compile all NDC-11s belonging to the selected drug associated with
HCPCS codes that appear on NDC-HCPCS code crosswalks published by CMS
\14\ for the most recent quarter in the total expenditures measurement
period (as such term is defined in proposed Sec. 429.20), and all NDC-
11s belonging to the selected drug that had Part D PDE utilization in
the total expenditures measurement period. We would also identify any
additional NDC-11s associated with the NDA(s)/BLA(s) of the selected
drug as found in recent updates of the NDC Structured Product Labeling
(SPL) Data Elements file (NSDE) file or the NDC Directory (including
its NDC Excluded Drugs Database file). In section 30.4 of the
Negotiation Program Guidance, we stated that we will remove any NDC-11s
for which CMS has evidence suggesting a lack of coverage under Part D
and Part B. Based on lessons learned from policy implementation in
initial price applicability years 2026 through 2028, we are proposing
to remove such requirement for initial price applicability year 2029
and subsequent years. Starting with a more comprehensive list of NDC-
11s holds utility for CMS and Primary Manufacturers, as it reduces the
number of NDC-11s that a Primary Manufacturer must identify as missing
from the list, as required in proposed Sec. 429.100(d)(1). We would
publish the selected drug list, as well as the list of drugs selected
for renegotiation, in a form and manner of CMS' choosing, which may be
on the CMS website.
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\14\ See: <a href="https://www.cms.gov/medicare/payment/part-b-drugs/asp-pricing-files">https://www.cms.gov/medicare/payment/part-b-drugs/asp-pricing-files</a>.
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We are proposing at Sec. 429.100(c)(2) to transmit the list of
NDC-11s identified at proposed Sec. 429.100(c)(1) to the Primary
Manufacturer. As proposed at Sec. 429.100(c)(3), we may revise our
list of NDC-11s of each selected drug, including without limitation
using information submitted by the Primary Manufacturer in accordance
with proposed Sec. 429.100.
In accordance with a Primary Manufacturer's responsibility under
section 1193(a)(4)(B) of the Act and under the Negotiation Program
Agreement (set forth in proposed Sec. 429.200 and described in section
II.C.1. of this proposed rule), we propose in Sec. 429.100(d) that a
Primary Manufacturer must review the list of NDC-11s provided by CMS at
proposed Sec. 429.100(c) and provide information on each NDC-11 on the
list of NDC-11s that make up a selected drug as a part of their data
submission. More specifically, we propose at Sec. 429.100(d) that a
Primary Manufacturer must review the list of NDC-11s and provide
proposed revisions to the list, as needed, by adding any NDC-11s
associated with the NDA(s)/BLA(s) of the selected drug that do not
appear on the agency's list of NDC-11s of the selected drug, including
any missing NDC-11s of a Secondary Manufacturer. A Primary Manufacturer
must also provide identifying information for any NDC-11 that appears
on the list of NDC-11s, including any NDC-11s added by the Primary
Manufacturer, on whether NDC-11(s): are for products distributed by or
under the name of a private label distributor; are not manufactured,
marketed, controlled or sold by the Primary Manufacturer or a Secondary
Manufacturer; represent a sample package; represent an inner package or
an outer package; and whether an NDC-11 has been discontinued. As
described in proposed Sec. 429.100(c)(3), we may revise the list of
NDC-11s that make up the selected drug based on this information
submitted by the Primary Manufacturer.
In accordance with a Primary Manufacturer's responsibility under
section 1193(a)(5) of the Act and under the Negotiation Program
Agreement (set forth in proposed Sec. 429.200), we propose in Sec.
429.100(e) that a Primary Manufacturer has an ongoing obligation to
report, at least 30 calendar days prior to the change taking effect,
any changes to the information provided in Sec. 429.100(d) to ensure
the list of NDC-11s of the selected drug identified in accordance with
proposed Sec. 429.100(c) remains complete and accurate. For example,
under proposed Sec. 429.100(e), a Primary Manufacturer must report to
CMS any new NDC-11s of the selected drug at least 30 days prior to
their first marketed date by or on behalf of the Primary Manufacturer
or any Secondary Manufacturer(s) of such selected drug. Failure to
provide timely reporting of changes to the list of NDC-11s of the
selected drug as described in proposed Sec. 429.100(e) may be
considered a violation of the Negotiation Program Agreement under
section 1193(a)(5) of the Act and proposed Sec. 429.200(b).
Since the Negotiation Program's inception, interested parties have
recommended greater transparency into the process for selecting drugs.
In response to these recommendations and in accordance with policy
established in the Negotiation Program Guidance, we published a list of
the 50 top negotiation-eligible drugs for initial price applicability
year 2028 (including the 15 selected drugs for initial price
applicability year 2028).\15\ To harmonize the request from interested
parties for greater transparency into the process for selecting drugs
with CMS operations, for initial price applicability year 2029 and
subsequent years, we are proposing to publish a list of the up to 30
top negotiation-eligible drugs (including the up to 20 selected drugs)
ranked by combined total expenditures under Part B and Part D, as
determined under proposed Sec. 429.105(a), and information on the NDC-
9s, NDC-11s, and HCPCS codes for these negotiation-eligible drugs, as
applicable and to the extent feasible. The purpose of publishing a list
of negotiation-eligible drugs beyond selected drugs was, and remains,
to promote transparency in the drug selection process. The conditions
that determine which drugs meet the statutory requirements for a drug
to become a qualifying single source drug, negotiation-eligible drug,
or selected
[[Page 36246]]
drug for a given initial price applicability are not static. Such list
was not, and is not, intended to predict or replicate the selected drug
list for future initial price applicability years. The honed focus on
the up to 30 top drugs would continue to provide transparency into the
drug selection process. We believe the prior policy of publishing
negotiation-eligible drugs with rankings lower than 30 (that is, #31
through #50) provided less meaningful transparency into the drug
selection process for a given initial price applicability year, as
identifying such drugs provides little insight into the criteria and
conditions that were material to the identification of the selected
drug list for that initial price applicability year. Finally,
consistent with prior policy, we propose that the list of top drugs
based on combined total expenditures would reflect the removal of
negotiation-eligible drugs that qualify for the Biosimilar Delay.
---------------------------------------------------------------------------
\15\ See: <a href="https://www.cms.gov/files/document/factsheet-medicare-top-50-negotiation-eligible-drug-list-ipay-2028.pdf">https://www.cms.gov/files/document/factsheet-medicare-top-50-negotiation-eligible-drug-list-ipay-2028.pdf</a>.
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2. Selection of Drugs for Negotiation (Sec. 429.105)
Section 1192(b)(1)(A) of the Act requires that, in carrying out
section 1192(a) of the Act, the Secretary shall, with respect to an
initial price applicability year, rank negotiation-eligible drugs, as
described in section 1192(d)(1) of the Act, according to the total
expenditures for such drugs under parts B and D of Title XVIII, as
determined by the Secretary, during the most recent period of 12 months
prior to the selected drug publication date (but ending not later than
October 31 of the year prior to the year of such drug publication
date), with respect to such year, for which data are available, with
the negotiation-eligible drugs with the highest total expenditures
being ranked the highest. Section 1192(b)(1)(B) of the Act requires
that the Secretary select from such ranked drugs with respect to such
initial price applicability year the negotiation-eligible drugs with
the highest such rankings. With respect to initial price applicability
years 2026 through 2028, we implemented these requirements through
guidance, including, for example, section 30.3 of the Negotiation
Program Guidance with respect to initial price applicability year 2028.
We are proposing at Sec. 429.105 to select 20 (or all, if such
number is less than 20) negotiation-eligible drugs for negotiation for
each initial price applicability year.
First, with respect to an initial price applicability year, we are
proposing at Sec. 429.105(a) to rank the list of negotiation-eligible
drugs identified at proposed Sec. 429.115 by combined total
expenditures under both Part B and Part D in descending order: the
negotiation-eligible drug with the highest total expenditures under
Part B and Part D would be listed first, and the negotiation-eligible
drug with the lowest total expenditures under Part B and Part D would
be listed last (the proposed methodology for the calculation of total
expenditures under Part B and total expenditures under Part D is
described in proposed Sec. 429.120 and section II.B.5. of this
proposed rule). If a negotiation-eligible drug appears on both the Part
D high-spend drug list and Part B high-spend drug list (set forth in
proposed Sec. 429.115(a)(1) and (a)(2), respectively, and described in
section II.B.4. of this proposed rule), it would receive only one
ranking for purposes of selection, according to its combined total
expenditures under both Part B and Part D. If a negotiation-eligible
drug appears on only one high-spend list, CMS would still combine total
expenditures under both Part B and Part D.
Second, with respect to an initial price applicability year, we are
proposing at Sec. 429.105(b) to remove any biological products that
qualify for delayed selection under section 1192(f) of the Act, as
proposed at Sec. 429.110 and described in section II.B.3. of this
proposed rule.
Finally, we propose at Sec. 429.105(c) to select for negotiation
the 20 (or all, if such number is less than 20) highest ranked
negotiation-eligible drugs remaining on the ranked list for the initial
price applicability year. In guidance for initial price applicability
years 2026, 2027 and 2028, including, for example, section 30.3 of the
Negotiation Program Guidance, we established that for initial price
applicability years 2026, 2027, and 2028, in the event that two or more
negotiation-eligible drugs had the same total expenditures to the
dollar, and such total expenditures were the 10th or 15th highest among
negotiation-eligible drugs, as applicable for the initial price
applicability year, we will rank those negotiation-eligible drugs based
on which drug had the earlier approval or licensure date, as
applicable, associated with the earliest-approved FDA application
belonging to the NDA/BLA holder and containing the drug's active
moiety/active ingredient, and select based on that ranking until there
were 10 or 15 (as applicable) selected drugs (or until all drugs were
selected, if the number of negotiation-eligible drugs was less than 10
or 15, as applicable). In this proposed rule, we are proposing to
modify this methodology. We propose that to determine whether two or
more negotiation-eligible drugs have the same total expenditures, and
such total expenditures are the 20th highest among negotiation-eligible
drugs (or the highest, if the number is less than 20), we would
evaluate such total expenditures to the cent, rather than to the dollar
as under prior policy. We believe that determining total expenditures
to the cent, rather than the dollar, is more precise for purposes of
determining the selected drug list. For such drugs with the same
combined total expenditures under Part B and Part D to the cent, we
would continue to rank those negotiation-eligible drugs based on which
drug has the earliest-approved FDA application belonging to the NDA/BLA
holder and containing the drug's active moiety/active ingredient, and
select based on that ranking until there are 20 selected drugs (or
until all drugs are selected, if the number of negotiation-eligible
drugs is less than 20).
3. Request for a Biosimilar Delay (Sec. 429.110)
a. Overview of the Requirements for a Delay in the Selection and
Negotiation of Certain Biological Products With High Likelihood of
Biosimilar Market Entry
Section 1192(b)(1)(C) of the Act requires the Secretary to remove
from the ranked list of negotiation-eligible drugs (described in
proposed Sec. 429.105 and section II.B.2. of this proposed rule) any
negotiation-eligible drug for which the inclusion on the selected drug
list is delayed in accordance with section 1192(f) of the Act.
Specifically, section 1192(f)(1)(B) of the Act allows the manufacturer
of a biosimilar biological product (defined at proposed Sec. 429.20 as
the ``Biosimilar Manufacturer'' of a Biosimilar) to submit a request,
prior to the selected drug publication date for an initial price
applicability year, for CMS' consideration to delay the inclusion of a
negotiation-eligible drug that includes the reference product for the
Biosimilar (defined at proposed Sec. 429.20 as a ``Reference Drug'')
on the selected drug list for such given initial price applicability
year (which we refer to as a ``Biosimilar Delay'').
Section 1192(f) of the Act provides for two potential requests for
a Biosimilar Delay: (1) a request to delay the inclusion of a Reference
Drug by one initial price applicability year (``Initial Delay Request''
as defined in proposed Sec. 429.20) under section 1192(f)(1)(B)(i)(I)
of the Act; and (2) a request to delay the inclusion of a Reference
Drug for which an Initial Delay Request has been granted for a second
initial price applicability year
[[Page 36247]]
(``Additional Delay Request'') under section 1192(f)(1)(B)(i)(II) of
the Act. Together, CMS refers to an Initial Delay Request and an
Additional Delay Request as ``Biosimilar Delay Requests'' as defined in
proposed Sec. 429.20. Proposed Sec. 429.110(b) through (f) address
the requirements for a Biosimilar Manufacturer to submit a Biosimilar
Delay Request and for CMS to determine if the inclusion of the
Reference Drug on the selected drug list should be delayed due to such
Biosimilar Delay Request. As set forth in proposed Sec. 429.110(a),
for purposes of the provisions at proposed Sec. 429.110 and in our
discussion of this section herein, all references to ``marketed'' or
``marketing'' mean Bona Fide Marketing as defined in proposed Sec.
429.20 and set forth at proposed Sec. 429.130(a). We discuss Bona Fide
Marketing further in section II.B.6.d. of this proposed rule.
Biosimilar Manufacturers that believe that the Reference Drug of
their Biosimilar may be a selected drug for an initial price
applicability year may submit an Initial Delay Request for the first
year and an Additional Delay request for the second year, and CMS would
disregard that request if the Reference Drug would not, in fact, be a
selected drug for an initial price applicability year. Biosimilar
Manufacturers are encouraged to consult publicly available data on
expenditures for drugs payable under Part B and/or covered under Part
D, including data published by CMS, including but not limited to data
on the Medicare Part B Drug Spending Dashboard \16\ and the Medicare
Part D Drug Spending Dashboard,\17\ which may allow them to determine
the likelihood that a given drug may be a selected drug.
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\16\ Available at: <a href="https://data.cms.gov/tools/medicare-part-b-drug-spending-dashboard">https://data.cms.gov/tools/medicare-part-b-drug-spending-dashboard</a>. Of note, this dashboard excludes MA data
for Part B beneficiaries.
\17\ Available at: <a href="https://data.cms.gov/tools/medicare-part-d-drug-spending-dashboard">https://data.cms.gov/tools/medicare-part-d-drug-spending-dashboard</a>.
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As discussed in further detail in section IV. of this proposed
rule, we are also proposing revisions to a currently approved
information collection for a manufacturer to submit an Initial Delay
Request, titled the Negotiation Program Drug Selection for Initial
Price Applicability Year 20XX under Section 11001 and 11002 of the
Inflation Reduction Act Information Collection Request (ICR) (CMS-
10844, OMB 0938-1443) (hereinafter, the ``Drug Selection ICR''), for a
60-day public comment period concurrently with this proposed rule. A
form and manner for submitting a Biosimilar Delay Request, consistent
with proposed Sec. 429.110(f), would be specified in the ICR for an
initial price applicability year for an Initial Delay Request or an
Additional Delay Request. As discussed in further detail in the
accompanying 60-day package, we are including questions specific to an
Initial Delay Request only within the ICR because CMS did not grant an
Initial Delay Request for initial price applicability year 2028 and
thus we are not including questions pertaining to submitting an
Additional Delay Request for initial price applicability year 2029. We
will expand the collection to include questions pertaining to an
Additional Delay Request when necessary for an upcoming initial price
applicability year when there is a Biosimilar Manufacturer that would
be eligible to submit an Additional Delay Request after the granting of
an Initial Delay Request. Information submitted in a Biosimilar Delay
Request that is trade secret or confidential commercial or financial
information will be protected from disclosure if the information meets
the requirements set forth under Exemptions 3 and/or 4 of the Freedom
of Information Act (FOIA) (5 U.S.C. 552(b)(3), (4)).
For an Initial Delay Request, if we determine that an otherwise
negotiation-eligible drug should be delayed from selection because of
the requirements proposed in Sec. 429.110(c), but the Biosimilar is
not licensed and marketed based on the requirements proposed in Sec.
429.110(h)during the Initial Delay Period (which we propose to define
in Sec. 429.20 as the time period between (1) the selected drug
publication date for the initial price applicability year for which the
Reference Drug otherwise would have been included on the selected drug
list but for the successful Initial Delay Request, and (2) the selected
drug publication date with respect to the initial price applicability
year that is 1 year after the initial price applicability year for
which the Reference Drug otherwise would have been included on the
selected drug list but for the successful Initial Delay Request), the
Biosimilar Manufacturer would have the opportunity to submit an
Additional Delay Request consistent with proposed Sec. 429.110(e). If
the Biosimilar Manufacturer fails to submit an Additional Delay Request
or submits an Additional Delay Request that we determine does not meet
all the requirements proposed in Sec. 429.110(e), as proposed in Sec.
429.110(h)(1)(ii), the Reference Drug would be included on the selected
drug list for the initial price applicability year that is 1 year after
the initial price applicability year for which the Reference Drug would
have been included on the selected drug list if not for the successful
Initial Delay Request. However, we would not include the Reference Drug
on such list if another biosimilar of the Reference Drug is marketed
before the publication date of the list.
If the Biosimilar named in a successful Additional Delay Request is
not licensed and marketed during the Second Delay Period (which we
propose to define in Sec. 429.20 as the time period between (1) the
publication date of the selected drug list for initial price
applicability year that is 1 year after the initial price applicability
year for which the Reference Drug would have been included on the
selected drug list but for the successful Initial Delay Request, and
(2) the publication date of the selected drug list for initial price
applicability year that is 2 years after the initial price
applicability year for which the Reference Drug would have been
included on the selected drug list but for the successful Initial Delay
Request), as proposed in Sec. 429.110(h)(2), the Reference Drug would
be included on the selected drug list for the initial price
applicability year that is 2 years after the initial price
applicability year for which the Reference Drug would have been
included on the selected drug list if not for the successful Initial
Delay Request(s). However, if another biosimilar of the Reference Drug
is marketed prior to the publication date of such list, we would not
include the Reference Drug on the list.
Additionally, as proposed in Sec. 429.110(i)(1), if CMS delayed
the selection and negotiation of a Reference Drug for 1 or 2 years, but
the Biosimilar was not licensed and marketed, and the Reference
Manufacturer agrees to an MFP for the Reference Drug, the Reference
Manufacturer would owe a rebate to the Federal Supplementary Medical
Insurance Trust Fund for drugs payable under Part B or the Medicare
Prescription Drug Account for drugs covered under Part D for the years
that the manufacturer would have provided access to the MFP for the
Reference Drug but for the successful Biosimilar Delay Requests.
Consistent with section 1192(f)(4) of the Act and as described in
section II.B.3.c. of this proposed rule, proposed Sec. 429.110(i)
includes the proposed requirements for the calculation of the rebate.
Consistent with section 1198(2) of the Act and proposed Sec.
429.30, there would no administrative or judicial review of CMS'
determinations under section 1192(f) of the Act and in proposed Sec.
429.110 regarding a Biosimilar Delay Request.
[[Page 36248]]
b. Requirements for Granting a Biosimilar Delay Request (Sec.
429.110(c) Through (f))
Section 1192(f)(1)(B)(ii)(I) of the Act requires that the request
for the delay be made by the Biosimilar Manufacturer and cannot be
initiated by a separate party, such as CMS or the Reference
Manufacturer. The Biosimilar Manufacturer, as defined in proposed Sec.
429.20, that is specifically eligible to submit the request is the BLA
holder for the Biosimilar or, if the Biosimilar has not yet been
licensed, the sponsor of the BLA submitted for review by the FDA. Also
included in the definition of ``Biosimilar Manufacturer'' at proposed
Sec. 429.20, if neither the Biosimilar has been licensed nor the BLA
has been submitted to FDA, the Biosimilar Manufacturer eligible to
submit the request is the organization planning to be the sponsor of
the BLA submitted for review by FDA. This approach, which is consistent
with the policies for implementation as described in sections 30.3.1
through 30.3.1.5 of Negotiation Program Guidance, is appropriate
because: (1) it clearly identifies one manufacturer that may submit a
Biosimilar Delay Request for a given Biosimilar, avoiding the
possibility that CMS would receive two such requests naming the same
Biosimilar for the same initial price applicability year; and (2) the
status of the application for licensure for the Biosimilar is material
to CMS' consideration of a Biosimilar Delay Request, as described in
proposed Sec. 429.110. For both an Initial Delay Request and an
Additional Delay Request, certain requirements must be met for CMS to
grant such requests. These requirements are included in proposed Sec.
429.110(c) for an Initial Delay Request and proposed Sec. 429.110(e)
for an Additional Delay Request.
Section 1192(f)(1)(B)(ii)(I) and (II) of the Act requires the
Biosimilar Manufacturer to make the request prior to the selected drug
publication date for the initial price applicability year for which the
Biosimilar Manufacturer is requesting a Biosimilar Delay. As such, we
are proposing at Sec. 429.110(f) that a Biosimilar Manufacturer may
submit to CMS a request for a Biosimilar Delay at the time and in a
form and manner specified by CMS. Consistent with the process and
timeline for previous initial price applicability years, CMS intends to
collect requests via the CMS Health Plan Management System (CMS HPMS)
and provide for a 30-day submission period as discussed in the Drug
Selection ICR. We will not consider late or incomplete submissions.
Upon receipt of a complete Biosimilar Delay Request, CMS will consider
whether the requirements are met, as applicable, in proposed 429.110(c)
for an Initial Delay Request or proposed Sec. 429.110(e) for an
Additional Delay Request.
With respect to Initial Delay Requests, we would first determine if
the proposed requirements under proposed Sec. 429.110(c)(1) have been
met. Section 1192(f)(1)(A) of the Act and, as described in proposed
Sec. 429.110(c)(1)(i), requires that the Reference Drug would be an
extended-monopoly drug, as defined in section 1194(c)(4) of the Act and
proposed Sec. 420.20, included on the selected drug list for the
initial price applicability year, absent the Biosimilar Delay. For
Initial Delay Requests, this means that the Reference Drug must have
received its initial BLA licensure at least 12 years, but fewer than 16
years, prior to the start of the relevant initial price applicability
year. Section 1194(c)(4)(B)(ii) of the Act specifies that selected
drugs for which a manufacturer had an agreement under the Negotiation
Program for an initial price applicability year prior to 2030 are
excluded from the definition of extended-monopoly drugs (definition
proposed at Sec. 429.20). Importantly, however, an Initial Delay
Request must be submitted by a Biosimilar Manufacturer before the
selected drug publication date for an initial price applicability year
and before the Reference Manufacturer would have entered into an
agreement under the Negotiation Program. Therefore, we continue to
believe the exception to the definition of ``extended-monopoly drug''
in section 1194(c)(4)(B)(ii) of the Act would not apply at the time
that a delay would be requested for initial price applicability year
2029. Accordingly, we believe the Biosimilar Delay Request process
under section 1192(f) of the Act is applicable for future initial price
applicability years. As such, Biosimilar Manufacturers may submit an
Initial Delay Request for initial price applicability year 2029,
provided that the Reference Drug named in the request would have been
licensed for at least 12 years but fewer than 16 years prior to the
start of the initial price applicability year beginning on January 1,
2029.
Additionally, to qualify for an Initial Delay Request, section
1192(f) of the Act requires the following (as proposed in Sec.
429.110(c)):
<bullet> In accordance with section 1192(f)(1)(A) of the Act and as
described in proposed Sec. 429.110(c)(1)(ii), the Reference Drug must
include the reference product identified in the Biosimilar's
application for licensure under section 351(k) of the PHS Act that has
been approved or accepted for review by FDA. We note that to grant a
Biosimilar Delay Request, the licensure application for the Biosimilar
does not need to include all of the dosage forms, strengths, and
indications for which the Reference Drug has received approval. With
respect to the reference product, the Initial Delay Request may list
the brand name and/or the name of the reference product's active
ingredient.
<bullet> In accordance with section 1192(f)(2)(D)(iii) of the Act
and as described in proposed Sec. 429.110(c)(iii), a Biosimilar Delay
Request would not be granted if more than 1 year has elapsed since the
licensure of the Biosimilar and marketing of the Biosimilar has not
commenced.
<bullet> In accordance with section 1192(f)(2)(D)(iv) of the Act
and as described in proposed Sec. 429.110(c)(1)(iv)(A), the Biosimilar
Manufacturer must not be the same as the Reference Manufacturer and
must not be treated as being the same under section 1192(f)(1)(C) of
the Act. For the purposes of this determination, all persons treated as
a single employer under subsection (a) or (b) of section 52 of the
Internal Revenue Code (IRC), or in a partnership, shall be treated as
one manufacturer in accordance with section 1192(f)(1)(C) of the Act.
For the purposes of this determination, ``partnership'' (as proposed at
Sec. 429.20) is defined at section 1192(f)(1)(C)(ii) of the Act as a
syndicate, group, pool, joint venture, or other organization through or
by means of which any business, financial operation, or venture is
carried on by the Reference Manufacturer and the Biosimilar
Manufacturer.
<bullet> In accordance with section 1192(f)(2)(D)(iv) of the Act
and as described in proposed Sec. 429.110(c)(1)(iv)(B), the Biosimilar
Manufacturer and the Reference Manufacturer must not have entered into
an agreement that--
++ Requires or incentivizes the Biosimilar Manufacturer to submit a
Biosimilar Delay Request; or
++ Directly or indirectly restricts the quantity of the Biosimilar
that may be sold in the United States over a specified period of time.
We would consider any agreement between the Biosimilar Manufacturer
and the Reference Manufacturer that directly or indirectly restricts
the quantity of the Biosimilar that the Biosimilar Manufacturer may
sell during any period of time on or after the selected drug
publication date for the initial price applicability year for which the
Biosimilar Manufacturer is requesting a Biosimilar Delay, as failing to
meet this requirement.
[[Page 36249]]
Once we determine the requirements proposed in Sec. 429.110(c)(1)
are met, we would then determine if there is a high likelihood, as
required in section 1194(f)(1)(A) of the Act and as proposed in Sec.
429.110(c)(2), that the Biosimilar will be licensed and marketed before
the date that is 2 years after the statutorily defined selected drug
publication date for the initial price applicability year for which the
Reference Drug would be included on the selected drug list absent a
successful Initial Delay Request (``High Likelihood Deadline,'' as
defined in proposed Sec. 429.20). For example, the High Likelihood
Deadline for an Initial Delay Request for initial price applicability
year 2029 would be February 1, 2029. Specifically, in accordance with
section 1192(f)(3) of the Act and consistent with implementation of the
policies in section 30.3.1.3 of Negotiation Program Guidance Program,
we propose in Sec. 429.110(d) that there is a high likelihood the
Biosimilar will be licensed and marketed before the High Likelihood
Deadline if each of the following criteria are met:
<bullet> An application for licensure under section 351(k) of the
PHS Act for the Biosimilar has been accepted for review or licensed by
FDA.
<bullet> Clear and convincing evidence that the Biosimilar will be
marketed before the High Likelihood Deadline.
We propose at Sec. 429.110(d)(1) that CMS will specify the due
date by which the application for licensure must be accepted for review
or approved by the FDA, which will be a date before the selected drug
publication date for the initial price applicability year for which the
Biosimilar Manufacturer requests a Biosimilar Delay in order to permit
sufficient time for CMS to review the information and finalize the
selected drug list prior to publishing the selected drug list for the
initial price applicability year. This would enable CMS to use the most
recent possible data to make this determination, while still allowing
for sufficient time for such requests to inform the selected drug list
prior to the selected drug publication date as required by section
1192(a) of the Act. If the Biosimilar's application for licensure has
not been accepted for review by the specified date, including in the
case where the Biosimilar Manufacturer submitted an application for
licensure that has not been accepted for review by FDA or for which a
filing determination is pending, we would deny the Initial Delay
Request. Additionally, CMS would consider an application for licensure
under section 351(k) of the PHS Act that has been accepted for review
and received a complete response letter from the FDA to meet the
section 1192(f)(3)(A) requirement that an application for licensure
under section 351(k) for the biosimilar biological product has been
accepted for review by FDA.
To demonstrate clear and convincing evidence that the Biosimilar
will be marketed before the High Likelihood Deadline, we propose at
Sec. 429.110(d)(2) that the Biosimilar Delay Request must include
information to demonstrate both: (1) that patents related to the
Reference Drug are unlikely to prevent the Biosimilar from being
marketed; and (2) that the Biosimilar Manufacturer will be
operationally ready to market the Biosimilar. These requirements
address the two primary contributing factors to delays in marketing of
biosimilars approved in the U.S. to date, and so we believe that
evidence showing that a Biosimilar meets these two requirements is
sufficient to establish clear and convincing evidence that the
Biosimilar will be marketed.
First, regarding the proposal at Sec. 429.110(d)(2)(i) that the
Biosimilar Delay Request must clearly demonstrate that patents related
to the Reference Drug are unlikely to prevent the Biosimilar from being
marketed before the High Likelihood Deadline: we will only consider
patents relating to the reference product included in the Reference
Drug that are applicable to the Biosimilar. For example, if a
Biosimilar Manufacturer has obtained licensure with biosimilar labeling
that omits a patent-protected indication or other patent-protected
information, then such patents that cover the omitted indication or the
omitted information will not be considered to be ``applicable to the
Biosimilar''. Specifically, we propose at Sec. 429.110(d)(2)(i)(A)
through (D) that the Biosimilar Manufacturer must demonstrate that
patents related to the Reference Drug are unlikely to prevent the
Biosimilar from being marketed before the High Likelihood Deadline
through any of four pathways specified. The first option the Biosimilar
Manufacturer may demonstrate is that there will be no unexpired patents
relating to the reference product included in the Reference Drug that
are applicable to the Biosimilar. The second option the Biosimilar
Manufacturer may demonstrate is that one or more court decisions or
decisions by the United States Patent and Trademark Office (USPTO)'s
Patent Trial and Appeal Board (PTAB) establish the invalidity,
unenforceability, or non-infringement of any potentially applicable
unexpired patents relating to the reference product included in the
Reference Drug that a patent holder asserted was applicable to the
Biosimilar. The third option the Biosimilar Manufacturer may
demonstrate is that neither a court nor PTAB has adversely ruled
against the Biosimilar Manufacturer's patent assertion(s) pertaining to
unexpired patent(s) relating to the reference product included in the
Reference Drug applicable to the Biosimilar, and the Biosimilar
Manufacturer has publicly announced a precise launch date for the
Biosimilar that is both a calendar date before the High Likelihood
Deadline and is not contingent on the outcome of pending litigation.
Finally, the fourth option the Biosimilar Manufacturer may demonstrate
is that the Biosimilar Manufacturer has a signed agreement with the
Reference Manufacturer that permits the Biosimilar Manufacturer to
market the Biosimilar before the High Likelihood Deadline, without
improper constraints on the Biosimilar Manufacturer. In accordance with
the parameters set forth in section 1192(f)(2)(D)(iv) of the Act and
proposed Sec. 429.110(c)(1)(iv) of this section, an improper
constraint includes, but is not limited to: circumstances in which the
Biosimilar Manufacturer is the same as the Reference Manufacturer or is
treated as being the same pursuant to section 1192(f)(1)(C) of the Act;
an instance in which the Biosimilar Manufacturer has entered into an
agreement with the Reference Manufacturer that requires or incentivizes
the Biosimilar Manufacturer to submit a Biosimilar Delay Request; and
an instance in which a Biosimilar Manufacturer has entered into an
agreement with the Reference Manufacturer that directly or indirectly
restricts the quantity of the Biosimilar sold in the United States on
or after the selected drug publication date of the initial price
applicability year for which the Biosimilar Manufacturer is requesting
a Biosimilar Delay.
Second, regarding the proposal at Sec. 429.110(d)(2)(ii) that the
Biosimilar Delay Request must clearly demonstrate that the Biosimilar
Manufacturer will be operationally ready to market the Biosimilar
before the High Likelihood Deadline, to assess this requirement, we
propose to consider the Biosimilar Manufacturer's progress against the
actions, activities, and milestones that are typical of the normal
course of business leading up to the marketing of a drug as evidenced
by both: (1) disclosures about capital investment, revenue
expectations, and actions consistent with the normal course of business
for marketing of a biosimilar biological product before the High
Likelihood Deadline; and (2) a
[[Page 36250]]
manufacturing schedule that is consistent with the public-facing
statements and demonstrates readiness to meet revenue expectations. We
propose these criteria because we believe they are indicative of
operational readiness and should be available in the elements that CMS
must consider in making this determination as required by section
1192(f)(1)(B)(ii) of the Act.
In accordance with sections 1192(f)(3)(B), CMS must use information
from items described in sections 1192(f)(1)(B)(ii)(I)(bb) and (III) of
the Act submitted to CMS by the Biosimilar Manufacturer requesting the
Biosimilar Delay to identify if there is clear and convincing evidence
that the Biosimilar will be marketed before the High Likelihood
Deadline. Consistent with these statutory requirements and the policies
implementing section 30.3.1.3 of the Negotiation Program Guidance, we
propose at Sec. 429.110(f)(1)(i) through (iii) the information we
would review for such ``clear and convincing evidence,'' which must
include--
<bullet> All agreements related to the Biosimilar filed with the
Federal Trade Commission (FTC) or the Assistant Attorney General under
subsections (a) and (c) of section 1112 of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003;
<bullet> To the extent available, the manufacturing schedule for
the Biosimilar submitted to FDA during its review of the application
for licensure under section 351(k) of the PHS Act for the Biosimilar;
and
<bullet> To the extent available, the Biosimilar Manufacturer's
disclosures pertaining to the marketing of the Biosimilar (for example,
in filings with the Securities and Exchange Commission required under
section 12(b), 12(g), 13(a), or 15(d) of the Securities Exchange Act of
1934 or comparable documentation distributed to the shareholders of
privately held companies) about capital investment, revenue
expectations, and other actions typically taken by a manufacturer in
the normal course of business in the year (or the 2 years, as
applicable) before marketing of a Biosimilar.
To illustrate what information specifically that CMS might identify
within such documentation to potentially demonstrate that the
Biosimilar has a high likelihood of being marketed before the High
Likelihood Deadline, we provide three examples of ``clear and
convincing evidence'' that might be included in the documentation
required at section 1192(f)(3)(B) of the Act and proposed in Sec.
429.110(f)(1)(i) through (iii). These examples are illustrative but
alone may not always constitute ``clear and convincing evidence'' of a
high likelihood of being marketed. First, we provide two examples of
evidence that could potentially demonstrate that a patent (or patents)
related to the Reference Drug are unlikely to prevent the Biosimilar
from being marketed: (1) the listing of a signed agreement between the
Biosimilar and Reference Drug Manufacturers under ``Legal Proceedings''
or another section, as appropriate, in a Form 10-K, along with a copy
of the agreement if required to be filed with the Federal Trade
Commission (FTC) or the Assistant Attorney General under the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003, and (2)
the lack of any adverse actions from a court or PTAB under ``Legal
Proceedings'' or another section, as appropriate, in a Form 10-K
pertaining to a Biosimilar Manufacturer's patent assertion(s) of an
unexpired patent or patent(s) relating to the reference product
included in the Reference Drug applicable to the Biosimilar, and the
Biosimilar Manufacturer publicly announced a precise launch date for
the Biosimilar by a calendar date prior to the High Likelihood Deadline
within the operational preparations and/or other steps to market and/or
produce the Biosimilar under ``Management's Discussion and Analysis
(MD&A)'' or another section, as appropriate, in a Form 10-K. Second, we
provide one example of evidence that could potentially demonstrate that
the Biosimilar Manufacturer is operationally ready: information
regarding the operational preparations and/or other steps to market
and/or produce the Biosimilar under ``MD&A'' or another section, as
appropriate, in a Form 10-K. These distinct examples are intended to be
for illustrative purposes only and do not supersede the requirements of
the originating authorities for the required documentation (for
example, the Securities Exchange Act of 1934 governing disclosure
requirements). Consistent with section 1192(f)(1)(B)(ii)(III)(bb) of
the Act, comparable documentation that is distributed to the
shareholders of privately held companies could be provided in lieu of
any examples of disclosures required under the Securities Exchange Act
of 1934 for publicly traded companies. These examples are not
exhaustive of the information that might be included in the
documentation required at section 1192(f)(3)(B) of the Act and in a
submission for a request for an Initial Delay Request necessary to
demonstrate ``clear and convincing evidence''.
Finally, consistent with section 1192(f)(1)(B)(ii)(II) of the Act
and at proposed Sec. 429.110(f)(2), we may request additional
information from the Biosimilar Manufacturer as necessary to make a
determination with respect to the Initial Delay Request after reviewing
an Initial Delay Request. Any such written request would specify the
additional information required, a form and manner in which the
Biosimilar Manufacturer must provide the additional information, and
the deadline for providing such information.
As proposed at Sec. 429.110(g)(1), we would provide in writing a
notice of determination, on or after the selected drug publication date
for the initial price applicability year by a specific date to be set
forth by CMS, to the Biosimilar Manufacturer that requested the Initial
Delay Request regarding whether the request was successful or
unsuccessful. If unsuccessful, we would specify the reason for the
unsuccessful request. Such reasons provided may include: (1) failure to
submit all elements of the Biosimilar Delay Request by the applicable
deadline (CMS-10844, OMB 0938-1443); (2) failure to meet another
statutory requirement for granting a request (other than the high
likelihood requirement), including in the case that the Reference Drug
would not have been a selected drug for the initial price applicability
year absent the Initial Delay Request; or (3) failure to demonstrate a
high likelihood that the Biosimilar will be licensed and marketed
before the High Likelihood Deadline. We also propose at Sec.
429.110(g)(1)(i)(B) to notify each Reference Manufacturer named in a
successful Biosimilar Delay Request. We propose that such notification
would be in writing and would identify the Reference Drug that would
have been a selected drug in the initial price applicability year,
absent the successful Initial Delay Request. Reference Manufacturers
named in unsuccessful Initial Delay Requests would not be notified. We
will publish the number of Reference Drugs that would have been
selected drugs for the initial price applicability year, absent
successful Initial Delay Requests, as part of publishing the selected
drug list as proposed in Sec. 429.100 and described in section II.B.1.
of this proposed rule (see proposed Sec. 429.110(g)(2)).
Section 1192(f)(2)(B) of the Act requires CMS to determine whether
each Biosimilar named in a successful Initial Delay Request is licensed
and
[[Page 36251]]
marketed during the Initial Delay Period. CMS proposes at Sec.
429.110(h)(1) that we would determine whether each Biosimilar named in
a successful Initial Delay Request was licensed and marketed during the
Initial Delay Period. If we determine that the Biosimilar is not
licensed and marketed during the Initial Delay Period, we propose at
Sec. 429.110(h)(1)(i) that the Biosimilar Manufacturer will have the
opportunity to submit an Additional Delay Request. In proposed Sec.
429.110(g)(3), for successful Initial Delay Requests submitted with
respect to the initial price applicability year, we propose to notify a
Biosimilar Manufacturer if CMS has determined that the Biosimilar named
in the Biosimilar Manufacturer's successful Initial Delay Request is
licensed and marketed during the Initial Delay Period by a date to be
specified by CMS in technical guidance, which will be no later than the
end of October of the calendar year of the selected drug publication
date for the initial price applicability year for which the Biosimilar
Manufacturer submitted the successful Initial Delay Request. For
example, if CMS determined that a Biosimilar Manufacturer's Initial
Delay Request was successful for initial price applicability year 2029,
CMS would provide this notification to the Biosimilar Manufacturer no
later than the end of October 2027.
If the Biosimilar Manufacturer chooses to submit an Additional
Delay Request, sections 1192(f)(2)(B)(i)(I) and (iii) include
requirements for an Additional Delay Request. We propose these
requirements in Sec. 429.110(e), along with the corresponding
documentation requirements in Sec. 429.110(f). Consistent with section
1192(f)(2) of the Act, to first be eligible for an Additional Delay
Request, we would need to determine that the Biosimilar listed in the
Additional Delay Request was identified in a successfully granted
Initial Delay Request (consistent with proposed Sec. 429.110(c)) and
the licensure and marketing under section 351(k) of the PHS Act has not
commenced between the publication date of the selected drug list for
the initial price applicability year for which the Initial Delay
Request was granted and the date that is 1 year following that
publication date. We propose these requirements at Sec.
429.110(e)(1)(i) and (ii). Additionally, as a threshold requirement, we
would determine that the requirements proposed at Sec.
429.110(c)(1)(ii) through (iv) for an Initial Delay Request, in
accordance with sections 1192(f)(1) and (2) of the Act, remain met for
purposes of the Additional Delay Request (see proposed Sec.
429.110(e)(1)(iii)). Further, in accordance with section
1192(f)(2)(D)(ii) of the Act and as described in proposed Sec.
429.110(e)(1)(iv), a Biosimilar named in the Biosimilar Manufacturer's
successful Initial Delay Request is not eligible for an Additional
Delay Request if the status of the Reference Drug would change to a
long-monopoly drug (as defined in proposed Sec. 429.20), with respect
to the initial price applicability year for which the Biosimilar
Manufacturer is submitting an Additional Delay Request. If the
requirements proposed in Sec. 429.110(e)(1)(i) through (iv) are met,
we would then reevaluate and determine whether the requirements in
proposed Sec. 429.110(d) regarding whether there is a high likelihood
that the Biosimilar will be licensed and marketed before the High
Likelihood Deadline continue to be met as proposed in Sec.
429.110(e)(2). Finally, in accordance with section 1192(f)(2)(B)(i)(II)
of the Act and as described in proposed Sec. 429.110(e)(3), we must
determine, on the basis of clear and convincing evidence, that the
Biosimilar Manufacturer has made a significant amount of progress
towards both licensure and marketing of the Biosimilar since the
Biosimilar Manufacturer's submission of the successful Initial Delay
Request. In accordance with section 1192(f)(2)(B)(i)(II) of the Act,
CMS is required to use information from the following items when
assessing whether there is clear and convincing evidence that the
Biosimilar Manufacturer has made a significant amount of progress
towards licensure and marketing of the Biosimilar since the Biosimilar
Manufacturer's submission of the successful Initial Delay Request for
the Biosimilar: (1) all agreements related to the Biosimilar filed with
the FTC or the Assistant Attorney General pursuant to subsections (a)
and (c) of section 1112 of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (as described in section
1192(f)(1)(B)(ii)(I)(bb) of the Act); and (2) additional information
and documents that CMS may request after CMS has reviewed the
information required for submission of the Additional Delay Request
necessary to make a determination about an Additional Delay Request (as
described in section 1192(f)(1)(B)(ii)(II) of the Act).
Consistent with implementation of policies in section 30.3.1.4 of
the Negotiation Program Guidance, recognizing that approximately 1 year
has passed since submission of the successful Initial Delay Request, we
would consider whether the Biosimilar Manufacturer demonstrates that
the Biosimilar will be licensed and marketed before the High Likelihood
Deadline. Specifically, we propose at Sec. 429.110(e)(3) that the
determination of whether a significant amount of progress has been made
by the Biosimilar Manufacturer towards licensure and marketing of the
Biosimilar since the successful Initial Delay Request submission for
such Biosimilar will be based on a holistic review of the documentation
submitted with the Additional Delay Request (as described in proposed
Sec. 429.110(f)(1), including any follow-up documentation requests
from CMS to the manufacturer described in proposed Sec.
429.110(f)(2)). Within the request we would consider if the Biosimilar
Manufacturer can demonstrate affirmative progress towards being
operationally ready to market the Biosimilar, meaning that we would
consider the Biosimilar Manufacturer's progress on the actions,
activities, and milestones that are typical of the normal course of
business leading up to the marketing of a drug since the successful
Initial Delay Request submission for the Biosimilar evidenced in any
updates or supplements to the documents specified in section
1192(f)(1)(B)(ii)(III) of the Act and as described in proposed Sec.
429.110(f)(1). Additionally, we would consider if the manufacturing
schedule (as provided in Sec. 429.110(f)(1)(ii)) is consistent with
the public-facing statements (that may be identified within the
information provided in the materials set forth at proposed Sec.
429.110(f)(1)(iii)) and demonstrates readiness to meet revenue
expectations.
After completing our review of an Additional Delay Request, similar
to the process for notification after an Initial Delay Request, we
would notify the Biosimilar Manufacturer that submitted the Additional
Delay Request regarding CMS' determination of whether the Additional
Delay Request was successful or unsuccessful (see proposed Sec.
429.110(g)(1)(i)(A)). We also propose to notify the Reference
Manufacturer of a successful Additional Delay Request (see proposed
Sec. 429.110(g)(1)(i)(B)) and would publish the number of Reference
Drugs that would have been selected drugs for the initial price
applicability year if they had not been determined eligible by CMS for
a Biosimilar Delay Request for that initial price applicability year
(see proposed Sec. 429.110(g)(2)).
[[Page 36252]]
(c) Review For Failure of the Biosimilar To be Licensed and Marketed;
Rebate Owed for Failure of a Biosimilar To be Licensed and Marketed
(Sec. 429.110(h) through (i))
As discussed previously, CMS proposes at Sec. 429.110(h)(1) that
we would determine whether each Biosimilar named in a successful
Initial Delay Request was licensed and marketed during the Initial
Delay Period. If we determine that the Biosimilar is not licensed and
marketed during the Initial Delay Period, we propose at Sec.
429.110(h)(1)(i) that the Biosimilar Manufacturer will have the
opportunity to submit an Additional Delay Request. In proposed Sec.
429.110(h)(1)(ii), we propose that if the Biosimilar Manufacturer
chooses not to submit an Additional Delay Request, or submits an
Additional Delay Request that CMS determines does not meet all
requirements in proposed Sec. 429.110(e), CMS would include the
Reference Drug on the selected drug list for the initial price
applicability year that is 1 year after the initial price applicability
year for which the Reference Drug would have been included on the
selected drug list if not for the successful Initial Delay Request (for
example, the selected drug list for initial price applicability year
2030 for successful Initial Delay Requests for initial price
applicability year 2029), unless a different biosimilar biological
product is marketed before the publication of the selected drug list
for the applicable initial price applicability year, in which case CMS
could also determine, in accordance with section 1192(c) of the Act and
described in sections II.B.6.d. of this proposed rule, that the
Reference Drug no longer meets the criteria to be a selected drug and
will be excluded from such applicable list of drugs selected for an
initial price applicability year. Further, in accordance with section
1192(f)(2)(C) of the Act and as described in proposed Sec.
429.110(h)(2), CMS must determine whether each Biosimilar named in a
successful Additional Delay Request is licensed and marketed during the
Second Delay Period. We propose at Sec. 429.110(h)(2)(i) that if CMS
determines that the Biosimilar is not licensed and marketed during the
Second Delay Period, unless a different biosimilar biological product
is marketed, CMS would include the Reference Drug on the selected drug
list for the initial price applicability year that is 2 years after the
initial price applicability year for which the Reference Drug would
have been included on the selected drug list if not for the successful
Initial Delay Request.
In accordance with sections 1192(f)(2)(B)(ii), 1192(f)(2)(C), and
1192(f)(4)(A) of the Act and as described in proposed Sec.
429.110(i)(1), if (1) CMS delayed the selection and negotiation of a
Reference Drug for 1 or 2 years, (2) CMS determined that the Biosimilar
was not licensed and marketed, and (3) the manufacturer of the
Reference Drug agrees to an MFP for the Reference Drug, the Reference
Manufacturer is required to pay a rebate for the years that the
manufacturer would have provided access to the MFP for the Reference
Drug but for the delay. In accordance with section 1192(f)(4)(B) of the
Act, we specify in proposed Sec. 429.110(i)(4) that the rebate owed by
the Reference Manufacturer, for the year for which an Initial Delay
Request and, if applicable, an Additional Delay Request was granted
will be calculated as follows:
<bullet> In accordance with section 1192(f)(4)(B)(i) of the Act and
as described in proposed Sec. 429.110(i)(4)(ii), in the case of a
Reference Drug that is a drug covered under Part D, 75 percent of the
difference between the AMP, with respect to each of the calendar
quarters of the price applicability period, and the MFP negotiated for
the Reference Drug multiplied by the number of units dispensed under
Part D for the Reference Drug in each calendar quarter of the price
applicability period that would have applied but for the delay.
<bullet> In accordance with section 1192(f)(4)(B)(ii) of the Act
and as described in proposed Sec. 429.110(i)(4)(iii), in the case of a
Reference Drug payable under Part B, 80 percent of the difference
between the payment amount under section 1847A(b) of the Act, with
respect to each of the calendar quarters of the price applicability
period, and the MFP negotiated for the Reference Drug, multiplied by
the number of units of the billing and payment code of the Reference
Drug administered or furnished under Part B (excluding units that are
packaged into the payment amount for an item or service and are not
separately payable under Part B) for each calendar quarter of the price
applicability period that would have applied but for the delay.
<bullet> As described in proposed Sec. 429.110(i)(4)(iv), in the
case of a Reference Drug that is a drug covered under Part D and
payable under Part B, the rebate amount will be calculated by summing
the rebate amount for the units payable under Part B as specified in
proposed Sec. 429.110(i)(4)(iii) and the rebate amount for units
covered under Part D as specified in proposed Sec. 429.110(i)(4)(ii).
For the year for which an Additional Delay Request was granted, we
will adjust the MFP as described in section 1195(b)(1)(A) of the Act to
account for changes in the CPI-U. Additionally, before applying a
rebate as described in proposed Sec. 429.110(i)(5), we will determine
if the Reference Drug transitioned to a long monopoly drug, at the time
of its inclusion on the selected drug list for the initial price
applicability year. For drugs payable under Part B and covered under
Part D, we would calculate the rebate for the units payable under Part
B following the Part B formula and we would calculate the rebate for
the units covered under Part D following the Part D formula.
In the case of a Reference Drug that CMS determines transitioned to
a long-monopoly drug during the delay, in accordance with section
1192(f)(4)(C) of the Act and as described in proposed Sec.
429.110(i)(5) through (6), the rebate calculation will substitute the
MFP negotiated for the Reference Drug with the following amount. The
amount will be equal to 65 percent of the average non-FAMP (consistent
with proposed Sec. 429.20 and defined in 38 U.S.C. 8126(h)(5)) for
2021 (or the first full year following market entry if there is no non-
FAMP for 2021) increased by the percentage increase in the CPI-U from
September 2021 (or December of such first full year following the
market entry) to September of the year prior to the selected drug
publication date for the initial price applicability year that would
have applied but for the Initial Delay Request. For example, if
inclusion of the Reference Drug on the selected drug list is delayed
until initial price applicability year 2030 due to a successful Initial
Delay Request, and the Reference Drug transitions to a long-monopoly
drug, the rebate calculation will use September of the year prior to
the selected drug publication date for initial price applicability year
2029 (September 2026) for the purposes of adjusting for inflation the
average non-FAMP for 2021. As described in proposed Sec.
429.110(i)(6), the rebate calculation will substitute the MFP
negotiated for the Reference Drug with the amount that is further
adjusted by the annual percentage increase in the CPI-U for the 12-
month period ending with July of the calendar year that is 2 years
before the initial price applicability year for which the Additional
Delay Request was granted.
In accordance with section 1192(f)(4)(B) of the Act and as
described in proposed Sec. 429.110(i)(4)(i), we intend to apply the
MFP to the rebate calculation for all the previous initial
applicability years where the Reference
[[Page 36253]]
Drug would have been on the selected drug list if not for the
successful Biosimilar Delay Request. For example, if the Reference Drug
would have been on the list for initial price applicability years 2029
and 2030 but for the approval of an Initial Delay Request and an
Additional Delay Request, and CMS determines the Biosimilar was not
licensed and marketed, we will use the MFP agreed to for initial price
applicability year 2031 to calculate the rebate amount for initial
price applicability years 2029 and 2030.
In accordance with section 1192(f)(4)(D) of the Act and as
described in proposed Sec. 429.110(i)(3), the rebates paid for drugs
payable under Part B would be deposited in the Federal Supplementary
Medical Insurance Trust Fund established under section 1841 of the Act.
The rebates paid for drugs covered under Part D would be deposited in
the Medicare Prescription Drug Account established under section 1860D-
16 of the Act, which is within the Federal Supplementary Medical
Insurance Trust Fund. Under proposed Sec. 429.110(i)(2), we would
specify a form and manner for the administration of rebates, including
the timing and mechanism for notifying manufacturers when a rebate is
owed and the process for payment, in future rulemaking.
4. Identification of Negotiation-Eligible Drugs (Sec. 429.115)
Section 1192(d)(1) of the Act requires that a ``negotiation-
eligible drug'' means, with respect to the selected drug publication
date with respect to an initial price applicability year, a qualifying
single source drug, as defined in section 1192(e) of the Act, that is
either a Part D high spend drug or a Part B high spend drug. Section
1192(d)(1)(A) of the Act describes a Part D high spend drug as a
qualifying single source drug that is among the 50 qualifying single
source drugs with the highest total expenditures under part D of Title
XVIII, as determined by the Secretary in accordance with section
1192(d)(3) of the Act, during the most recent 12-month period for which
data are available prior to such selected drug publication date (but
ending no later than October 31 of the year prior to the year of such
drug publication date). Section 1192(d)(1)(B) of the Act describes a
Part B high spend drug as a qualifying single source drug that is among
the 50 qualifying single source drugs with the highest total
expenditures under part B of Title XVIII, as determined by the
Secretary in accordance with section 1192(d)(3) of the Act, during such
most recent 12-month period describes in section 1192(d)(1)(A) of the
Act. With respect to initial price applicability years 2026 through
2028, we implemented these requirements through guidance, including,
for example, section 30.2 of the Negotiation Program Guidance with
respect to initial price applicability year 2028.
We are proposing to codify the statutory requirements in section
1192(d) of the Act at Sec. 429.115, including that a negotiation-
eligible drug for an initial price applicability year is a qualifying
single source drug, as identified under proposed Sec. 429.125, that is
among the 50 qualifying single source drugs with the highest total
expenditures under Part D, or among the 50 qualifying single source
drugs with the highest total expenditures under Part B. We are
proposing to codify our process for identifying the negotiation-
eligible drugs for each initial price applicability year, consistent
with the process implemented through prior guidance, as follows.
We propose at Sec. 429.115(a)(1) to identify Part D high spend
drugs described in section 1192(d)(1)(A) of the Act using the following
steps. We would first remove from negotiation eligibility any
qualifying single source drugs that are already selected drugs in
accordance with section 1192(d)(3)(A)(i) of the Act. Next, for
remaining qualifying single source drugs, CMS would calculate a
qualifying single source drug's total expenditures under Part D using
the methodology set forth at proposed Sec. 429.120(a) and described in
section II.B.5. of this proposed rule and rank those qualifying single
source drugs by total expenditures under Part D during the total
expenditures measurement period. Finally, we would identify the 50
qualifying single source drugs that have the highest total expenditures
under Part D during the total expenditures measurement period (that is,
Part D high spend drugs).
Then, we are proposing at Sec. 429.115(a)(2) to identify Part B
high spend drugs described in section 1192(d)(1)(B) of the Act using
the following steps. As with Part D high spend drugs, we would first
remove from negotiation eligibility any qualifying single source drugs
that are already selected drugs in accordance with section
1192(d)(3)(A)(i) of the Act.\18\ Next, for remaining qualifying single
source drugs, CMS would calculate a qualifying single source drug's
total expenditures under Part B using the methodology set forth at
proposed Sec. 429.120(b) and described in section II.B.5. of this
proposed rule and rank the remaining qualifying single source drugs by
total expenditures under Part B during the total expenditures
measurement period. Finally, we would identify the 50 qualifying single
source drugs that have the highest total expenditures under Part B
during the total expenditures measurement period (that is, Part B high
spend drugs).
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\18\ This removal would encompass qualifying single source drugs
that have been selected for initial price applicability years 2026
and 2027 based on Part D total expenditures.
---------------------------------------------------------------------------
We are proposing at Sec. 429.115(b) that, when identifying Part D
high spend drugs and Part B high spend drugs as proposed at Sec.
429.115(a)(1)(iv) and (a)(2)(iv), respectively, if two or more
qualifying single source drugs have the same total expenditures to the
cent under Part D or Part B, and such total expenditures are the 50th
highest among qualifying single source drugs under Part D or Part B, we
would rank the qualifying single source drugs based on which drug has
the earlier approval or licensure date, as applicable, associated with
the earliest-approved FDA application belonging to the NDA/BLA holder
and containing the active moiety/active ingredient in the drug, until
we have identified 50 Part D high spend drugs and Part B high spend
drugs, respectively. These 50 Part D high spend drugs and 50 Part B
high spend drugs, identified in accordance with proposed Sec.
429.115(a)(1) and (a)(2), respectively, would be the negotiation-
eligible drugs for the initial price applicability year. This proposal
is a modification from Negotiation Program Guidance, which established
that for initial price applicability years 2026, 2027, and 2028, we
would identify qualifying single source drugs with the same total
expenditures to the dollar. As noted in section II.B.2. of this
proposed rule, we believe that using information to the cent, rather
than to the dollar as under prior policy, is more precise for purposes
of determining negotiation-eligible drugs.
5. Calculation of Total Expenditures (Sec. 429.120)
As described in sections II.B.2., II.B.4., and II.B.6.c.2. of this
proposed rule, we are proposing at Sec. Sec. 429.105(a), 429.115(a),
and 429.125(e)(2) to calculate total expenditures under Part B and Part
D as a step in the processes for identifying selected drugs,
negotiation-eligible drugs, and drugs eligible for the low-spend
Medicare drug exclusion, respectively. Section 1191(c)(5) of the Act
defines the term ``total expenditures'' to include, in the case of
expenditures with respect to Part D, the total gross covered
prescription
[[Page 36254]]
drug costs (as defined in section 1860D-15(b)(3) of the Act). In the
case of ``total expenditures'' with respect to Part B, section
1191(c)(5) of the Act specifies that such term excludes expenditures
for a drug or biological product that are bundled or packaged into the
payment for another service. With respect to initial price
applicability years 2026 through 2028, we explained through guidance
how we will implement the statutory requirement to calculate total
expenditures under Part B and total expenditures under Part D,
including, for example, section 30 of the Negotiation Program Guidance
with respect to initial price applicability year 2028. We are proposing
to codify the definition of total expenditures in section 1191(c)(5) of
the Act at Sec. 429.20, and we propose how we would calculate total
expenditures under Part B and Part D at Sec. 429.120.
a. Calculation of Total Expenditures Under Part D
At Sec. 429.120(a), we propose to calculate total expenditures
under Part D for a given potential qualifying single source drug,
qualifying single source drug, negotiation-eligible drug, or selected
drug, as the sum of gross covered prescription drug costs for each PDE
record for such drug that meets the criteria in proposed Sec.
429.120(a)(1) through (a)(5). CMS would identify these PDE records as
follows: (1) the dates of service are during the total expenditures
measurement period (to allow a reasonable time for Part D plan sponsors
to submit PDE data, we would use PDE data for the dates of service in
the total expenditures measurement period that are available in CMS'
data repository by the November 30 following the total expenditures
measurement period (or the first business day following November 30 if
November 30 does not fall on a business day)); (2) total gross covered
prescription drug costs on the PDE record is greater than zero dollars;
(3) the PDE record is considered final action; \19\ (4) the drug
coverage status code indicates the PDE record is for a drug covered
under Part D; and (5) the compound code indicates the PDE record is not
for a compounded drug.\20\
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\19\ A PDE record is considered final action based on the final
action indicator for the claim and claim line.
\20\ As described in Negotiation Program Guidance, we provide
that, for operational reasons at this time, MFP refunds would not be
required for PDE records for selected drugs that were billed as
compounds. For alignment, we provide in proposed Sec. 429.120 that
PDE records with a compound code indicating the PDE record is for a
compounded drug would be excluded from the PDE data used to
calculate total expenditures under Part D used for the low-spend
Medicare drug exclusion (proposed Sec. 429.125(e)(2)) and to
identify negotiation-eligible drugs and selected drugs (proposed
Sec. Sec. 429.115 and 429.105). We are proposing to apply this same
exclusion to the ceiling for the MFP (proposed Sec. 429.410), the
Net Part D Plan Payment and Beneficiary Liability of a therapeutic
alternative(s) (proposed Sec. Sec. 429.20 and 429.510(d)), and the
application of the MFP across dosage forms and strengths (proposed
Sec. 429.700). A PDE record for a selected drug billed as a
compound refers to a PDE record with a compound code field equal to
``2=Compound.'' We would only use PDE records with a compound code
field equal to ``1=Not a Compound.'' A Part B claim billed as a
compounded drug refers to Part B claims billed with HCPCS code
J7999. For consistency with the treatment of compounded drugs
covered under Part D, we also would exclude Part B claims billed as
compounded drugs when calculating the low-spend Medicare drug
exclusion, the identification of negotiation-eligible drugs and
selected drugs, the ceiling for the MFP, and the application of the
MFP across dosage forms and strengths.
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b. Calculation of Total Expenditures Under Part B
At Sec. 429.120(b), we propose a methodology for calculating total
expenditures under Part B for a given potential qualifying single
source drug, qualifying single source drug, negotiation-eligible drug,
or selected drug. This methodology would use a combination of total
allowed charges from Original Medicare (OM) Part B claims data
(inclusive of beneficiary coinsurance and Medicare payment) and a
comparable amount calculated using Medicare Advantage (MA) encounter
data for Part B items and services, which would reflect the amount that
would have been applicable under OM. Then, we would sum total
expenditures under Part B based on OM Part B claims data and total
expenditures under Part B for MA encounter data. To allow a reasonable
time for providers and suppliers to submit OM Part B claims data and
Medicare Advantage Organizations to submit MA encounter data for Part B
items and services, we would use Part B data for the dates of service
in the total expenditures measurement period that are available in CMS'
data repository by November 30 following the total expenditures
measurement period (or the first business day following November 30 if
November 30 does not fall on a business day).
We received many comments on the draft guidance for initial price
applicability year 2028 and manufacturer effectuation of the MFP in
2026, 2027, and 2028 suggesting that CMS should account for
expenditures on drugs payable under Part B and administered to MA
enrollees when identifying Part B high spend drugs. In response to
these comments, we stated in the Negotiation Program Guidance that we
agreed with these commenters that MA expenditures for such drugs should
be accounted for and included in the calculation of total expenditures
under Part B, and we described CMS' methodology, consistent with the
previous paragraph, for including such expenditures in the calculation
of total expenditures under Part B. In this proposed rule, we reiterate
and expand upon the discussion in the Negotiation Program Guidance.
More than half (54 percent \21\) of Medicare enrollees were
enrolled in MA plans in 2025. We would therefore exclude a significant
portion of total spending on drugs payable under Medicare Part B by
only using Part B claims data in the calculation of total expenditures
under Part B. Such an approach would skew the negotiation-eligible drug
list toward drugs with high expenditures under Part D and away from
drugs with high expenditures under Part B and therefore could
misrepresent the highest spend drugs. There is no indication that
statute intends the negotiation-eligible drug list to skew towards
drugs with high expenditures under Part D; rather, section 1192(d)(1)
of the Act indicates equal treatment of drugs with high expenditures
under Part D and drugs with high expenditures under Part B, requiring
CMS to identify 50 Part D high spend drugs and 50 Part B high spend
drugs beginning in initial price applicability year 2028.
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\21\ Nancy Ochieng et al., ``Medicare Advantage in 2025:
Enrollment Update and Key Trends,'' KFF (July 28, 2025) <a href="https://www.kff.org/medicare/medicare-advantage-enrollment-update-and-key-trends/">https://www.kff.org/medicare/medicare-advantage-enrollment-update-and-key-trends/</a>.
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Consistent with the policy adopted in Negotiation Program Guidance,
in this proposed rule we propose that the term ``total expenditures
under part B of Title XVIII'' as defined at section 1191(c)(5) of the
Act and as used in the Negotiation Program, is best read to include MA
expenditures for drugs payable under Part B and administered to MA
enrollees. In the case of expenditures with respect to Part B, section
1191(c)(5) of the Act provides only that the term ``total
expenditures'' excludes expenditures for a drug or biological product
that are bundled or packaged into the payment for another service.
Statutory language in Title XVIII of the Act and sections 11001 and
11002 of the IRA suggest MA expenditures ought to be included in
``total expenditures under part B of title XVIII'' for purposes of the
Negotiation Program. First, section 1852(a)(1) of the Act requires MA
plans to provide to enrollees the ``benefits under the original
[M]edicare [Fee-For-Service]
[[Page 36255]]
program option,'' including, as relevant here, drugs payable under Part
B. For purposes of determining ``total expenditures'' with respect to
Part B for purposes of the Negotiation Program, we believe that MA
expenditures for drugs payable under Part B may thus be understood as
expenditures provided under this requirement to provide benefits
available under Part B, and appropriately included in total
expenditures under Part B for such drugs.
Further, section 1191(c)(2)(B) of the Act requires that, for
purposes of the Negotiation Program, a ``maximum fair price eligible
individual'' includes ``in the case such drug is furnished or
administered to the individual by a hospital, physician, or other
provider of services or supplier, an individual who is enrolled under
part B of title XVIII, including an individual who is enrolled in an MA
plan under part C of such title, if payment may be made under part B
for such selected drug.'' Including MA expenditures in the definition
of total expenditures under Part B is consistent with the statutory
approach reflected in this definition, which considers ``individual[s]
enrolled in an MA plan'' to be ``include[ed]'' within the reference to
individuals ``enrolled under part B of Title XVIII'' to the extent
``payment may be made under part B'' for a selected drug.
Finally, section 1191(c)(5) of the Act's definition of total
expenditures under Part B identifies explicitly one exclusion--
expenditures where payment for the drug is bundled with payment for
another Part B service--but does not similarly exclude MA expenditures.
As noted previously, the exclusion of MA expenditures would result in
far more significant consequences for the identification of
negotiation-eligible and selected drugs under the Negotiation Program
than the exclusion that is identified explicitly. In light of the
statutory indicia favoring inclusion of MA expenditures discussed
previously and the significant consequences with respect to the
Negotiation Program should MA expenditures be excluded, we believe the
absence of clear statutory language excluding such expenditures weighs
in favor of including MA expenditures in the definition of total
expenditures under Part B.
For these reasons, we are proposing at Sec. 429.120(b) a
methodology to include MA expenditures in the calculation of total
expenditures under Part B. As we noted in the Negotiation Program
Guidance, MA encounter data for Part B items and services does not
reliably include the actual amount paid by the MA plan sponsor. Due to
this gap in MA encounter data for Part B items and services, we believe
it appropriate to estimate MA expenditures for drugs payable under Part
B by using MA encounter data for Part B items and services to identify
the units of drugs payable under Part B that were administered under MA
and then determining what Medicare would have paid for such units under
OM Part B. Accordingly, we propose to use the following methodology to
calculate total expenditures under Part B:
<bullet> Total expenditures under Part B based on OM Part B claims
data would equal the sum of the total allowed charges for each OM Part
B claim for a qualifying single source drug that meets the following
criteria: (1) date of service is during the total expenditures
measurement period; (2) the claim type is associated with an OM Part B
claim in an outpatient setting (including but not limited to clinics,
Federally Qualified Health Centers, and ambulatory surgical centers), a
professional services claim, or durable medical equipment claim
(currently, these claim type codes are 40, 71, 72, 81, or 82); (3) the
total allowed charges (defined as the amount that is inclusive of the
beneficiary coinsurance and Medicare payment for covered Part B items
and services) for the claim line is greater than $0; (4) the claim is
considered final action; \22\ (5) the claim is not billed as a
compounded drug; and (6) the claim is not for a drug or biological
product that is bundled or packaged into the payment for another
service under Part B OM. We have identified rare instances where claims
for separate payment have been submitted for drugs payable under Part B
when such claims are typically payable only as part of a bundled
payment. We are proposing to exclude such separately billed claims.
---------------------------------------------------------------------------
\22\ An OM Part B claim is considered final action based on the
final action indicator for the claim and claim line.
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<bullet> Total expenditures under Part B based on MA encounter data
for Part B items would equal the sum of the total allowed charges that
would have been applicable under OM Part B for each MA encounter data
record for Part B services for such drug that meets the following
criteria: (1) date of service is during the total expenditures
measurement period; (2) the claim type is associated with an MA
encounter record in an outpatient setting (including but not limited to
clinics, Federally qualified health centers, and ambulatory surgical
centers), professional services, or durable medical equipment record,
as determined by CMS (currently, these claim types are 4012, 4013,
4014, 4022, 4023, 4032, 4034, 4071, 4072, 4073, 4074, 4075, 4076, 4077,
4079, 4083, 4085, 4087, 4089, 4700, and 4800); (3) the reported total
number of units on the MA encounter data record line is greater than
zero; (4) the encounter data record is considered final action; \23\
(5) the encounter data record is not denied; (6) the encounter data
record is not a chart review record; (7) the encounter data record line
is not for a supplemental benefit; (8) the encounter data record is not
reported as a compounded drug; and (9) the encounter data record is not
for a drug or biological product that is bundled or packaged into the
payment for another service under Part B OM. In instances where an
encounter data record for separate payment is submitted for a drug
payable under Part B when such a claim is typically payable under Part
B OM payment rules only as part of a bundled payment, such claim will
be considered to be bundled or packaged into the payment for another
service and will not be included in the total allowed charges
calculation. To calculate the total allowed charges that would have
been applicable under OM Part B for each of the aforementioned MA
encounter data records, we would first adjust the unit field in MA
encounter data for Part B items and services by referencing the
Medically Unlikely Edits (MUEs), which are designed to reduce improper
payments.\24\ Because Medicare Administrative Contractors apply these
edits to OM Part B claims, this would bring the MA encounter data for
Part B items and services into closer alignment. We would then multiply
the adjusted units by the appropriate published payment limit (for
example, Average Sales Price (ASP)-based) or payment rate (for example,
Outpatient Prospective Payment System (OPPS), Ambulatory Surgical
Center (ASC)) to calculate what would have been applicable for the Part
B items and services under OM.
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\23\ Final action for MA encounter data for Part B items and
services indicates the encounter was accepted by CMS and not
subsequently voided by the Medicare Advantage organization or
superseded by another encounter accepted by CMS.
\24\ See: <a href="https://www.cms.gov/medicare/coding-billing/ncci-medicare">https://www.cms.gov/medicare/coding-billing/ncci-medicare</a>.
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Typically, ``single source drugs and biologicals'' as defined in
section 1847A(c)(6)(D) of the Act are assigned to unique HCPCS codes;
however, there may be cases where a qualifying single source drug is
assigned to a HCPCS code with other products. In such cases, we are
proposing to use the apportionment
[[Page 36256]]
methodology proposed in Sec. 429.120(b)(3) wherein CMS would use ASP
sales volume data to apportion Part B total expenditures based on the
ratio of reported sales volume of the qualifying single source drug
compared to reported sales volume of all products assigned to the HCPCS
code to calculate the total expenditures under Part B.
6. Identification of Qualifying Single Source Drugs (Sec. 429.125)
Section 1192(e)(1) of the Act requires that the term ``qualifying
single source drugs'' means, with respect to an initial price
applicability year, subject to sections 1192(e)(2) through 1192(e)(4)
of the Act, a covered part D drug (as defined in section 1860D-2(e) of
the Act) that is described in section 1192(e)(1)(A) or section
1192(e)(1)(B) of the Act, or a drug or biological product for which
payment may be made under part B of title XVIII that is described in
section 1192(e)(1)(A) or section 1192(e)(1)(B) of the Act. With respect
to initial price applicability years 2026 through 2028, we implemented
these requirements through guidance, including, for example section
30.1 of the Negotiation Program Guidance with respect to initial price
applicability year 2028.
We are proposing that, with respect to each initial price
applicability year, a qualifying single source drug is a drug covered
under Part D, a drug payable under Part B, or both, as such terms are
defined at proposed Sec. 429.20, that meets the statutory criteria set
forth in section 1192(e) of the Act. Specifically, we propose in Sec.
429.125(a)(1) to codify the requirements in section 1192(e)(1)(A) of
that Act that, for drug products, a qualifying single source drug is a
drug covered under Part D, payable under Part B, or both: (1) that is
approved under section 505(c) of the FD&C Act and marketed pursuant to
such approval; (2) for which, as of the selected drug publication date
with respect to a given initial price applicability year, at least 7
years have elapsed since the date of such approval; and (3) that is not
the listed drug for any drug approved and marketed under an Abbreviated
New Drug Application (ANDA) under section 505(j) of the FD&C Act. We
propose in Sec. 429.125(a)(2) to codify the requirements in section
1192(e)(1)(B) of the Act that, for biological products, a qualifying
single source drug is a drug covered under Part D, payable under Part
B, or both: (1) that is licensed under section 351(a) of the Public
Health Service Act (``PHS Act'') and marketed pursuant to such
licensure; (2) for which, as of the selected drug publication date with
respect to a given initial price applicability year, at least 11 years
have elapsed since the date of such licensure; and (3) that is not the
reference product for any biological product that is licensed and
marketed under section 351(k) of the PHS Act.
a. Identification of Potential Qualifying Single Source Drugs (Sec.
429.125(b))
To identify drugs or biological products for purposes of
identifying qualifying single source drugs that meet the criteria in
section 1192(e) of the Act, we propose to identify drugs and biological
products that are potential qualifying single source drugs as described
at proposed Sec. 429.125(b).
Sections 11001 and 11002 of the IRA do not define what a ``drug''
or ``biological product'' is for purposes of identifying whether such a
drug or biological product is a qualifying single source drug. However,
the Act provides that a drug or biological product may have multiple
dosage forms, strengths, formulations, package sizes, or package types,
and multiple applications and approvals. Specifically, for purposes of
determining whether a qualifying single source drug is a negotiation-
eligible drug under section 1192(d)(1) of the Act, section
1192(d)(3)(B) of the Act states that CMS shall use data that is
aggregated across dosage forms and strengths of the drug, including new
formulations of the drug, such as an extended release formulation, and
not based on the specific formulation, package size, or package type of
the drug. Likewise, section 1192(d)(3)(B) of the Act's aggregation rule
applies to the calculation of a drug or biological product's total
expenditures for purposes of determining whether such drug or
biological product meets the low-spend Medicare drug exclusion from a
qualifying single source drug, described in section 1192(e)(3)(B) of
the Act. Similarly, section 1196(a)(2) of the Act directs CMS to
establish procedures ``to compute and apply the MFP different strengths
and dosage forms of a selected drug and not based on the specific
formulation or package size or package type of such drug.'' In
addition, section 1194(e)(1)(D) of the Act instructs CMS, for purposes
of the negotiation process (discussed in further detail in section
II.F. of this proposed rule), to consider, among other information,
``applications and approvals under section 505(c) of the Federal Food,
Drug, and Cosmetic Act or section 351(a) of the Public Health Service
Act,'' in the plural, for the ``drug,'' in the singular.
Different dosage forms and strengths, as well as different
formulations, of a drug or biological product, containing the same
active moiety/active ingredient, may be approved or licensed in
multiple NDAs or BLAs. Defining a potential qualifying single source
drug on the basis of a single NDA/BLA, and thereby excluding from such
potential qualifying single source drug dosage forms and strengths and
new formulations of the drug or biological product approved or licensed
under other NDAs/BLAs, would be inconsistent with these statutory
provisions. To give full effect to all relevant provisions of the
statute, including sections 1192(d)(3)(B), 1192(e), 1194(e)(1)(D), and
1196(a)(2) of the Act, we are proposing at Sec. 429.125(b) a process,
consistent with policies for implementation as described in, for
example, section 30.1 of the Negotiation Program Guidance subject to
proposed modifications as noted herein, to identify a potential
qualifying single source drug, for purposes of identifying qualifying
single source drugs that meet the statutory criteria under section
1192(e) of the Act, using the specific constituent dosage forms and
strengths (at the NDC-9 or NDC-11 level) that are identified as
aggregated under the same NDA/BLA holder for the same active moiety/
active ingredient.\25\ The policies proposed in Sec. 429.125(b), like
the policies in, for example, section 30.1 of the Negotiation Program
Guidance, would address how CMS is interpreting the statutory directive
in section 1192(e) of the Act to identify ``drug[s]'' or ``biological
product[s]'' for purposes of evaluating whether such drug or biological
product satisfies the criteria for qualifying single source drugs.
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\25\ In the context of identifying qualifying single source
drugs and calculating total expenditures for purposes of identifying
negotiation-eligible drugs and selected drugs, in this proposed rule
we use the term ``aggregation'' to refer to the process of
identifying the formulations and dosage forms and strengths that
constitute a qualifying single source drug, and that, if applicable,
CMS will use to calculate total expenditures when determining
whether such drug is a negotiation-eligible drug or selected drug.
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For drugs, we are proposing at Sec. 429.125(b)(1) to identify a
potential qualifying single source drug using all dosage forms and
strengths of the drug with the same active moiety and the same holder
of an NDA, inclusive of products that are marketed pursuant to
different NDAs. If there are multiple NDAs with the same active moiety
that include non-identical names reported for the NDA holder, including
situations where it appears the NDA holder name has not yet been
updated, we are proposing that we may further investigate whether such
NDA(s) are held by the same entity for the purposes
[[Page 36257]]
of identifying a potential qualifying single source drug using FDA
sources as well as relevant publicly available information as CMS deems
appropriate. The potential qualifying single source drug would also
include all dosage forms and strengths of the drug with the same active
moiety and marketed pursuant to the same NDA(s) described in the prior
sentences that are: (1) repackaged and relabeled products (defined at
proposed Sec. 429.20 to be consistent with 21 CFR 207.1) that are
marketed pursuant to such NDA(s); (2) authorized generic drugs (defined
in section 1192(e)(2)(B)(i) of the Act and at proposed Sec. 429.20 and
described further later in this section) that are marketed pursuant to
such NDA(s); or (3) multi-market approval (MMA) \26\ products imported
under section 801(d)(1)(B) of the FD&C Act that are marketed pursuant
to such NDA(s). Any dosage forms and strengths of the drug with the
same active moiety that are distributed by a private label distributor
and marketed pursuant to such NDAs would also be aggregated in the
potential qualifying single source drug of that NDA holder consistent
with the policies for implementation as described in, for example,
section 30.1 of the Negotiation Program Guidance.
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\26\ See: <a href="https://www.fda.gov/regulatory-information/search-fda-guidance-documents/importation-certain-fda-approved-human-prescription-drugs-including-biological-products-and">https://www.fda.gov/regulatory-information/search-fda-guidance-documents/importation-certain-fda-approved-human-prescription-drugs-including-biological-products-and</a>.
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For biological products, we are proposing at Sec. 429.125(b)(2) to
identify a potential qualifying single source drug using all dosage
forms and strengths of the biological product with the same active
ingredient and the same holder of a BLA, inclusive of products that are
marketed pursuant to different BLAs. If there are multiple BLAs with
the same active ingredient (or the same antigen component for a
biological product that is a vaccine for infectious disease(s), as
further described later in this section) that include non-identical
names reported for the BLA holder, including situations where it
appears the BLA holder name has not yet been updated, we are proposing
that we may further investigate whether such BLA(s) are held by the
same entity for the purposes of identifying a potential qualifying
single source drug using FDA sources as well as relevant publicly
available information as CMS deems appropriate. The potential
qualifying single source drug would also include all dosage forms and
strengths of the biological product with the same active ingredient and
marketed pursuant to the same BLA(s) described in the prior sentences
that are: (1) repackaged and relabeled products that are marketed
pursuant to such BLA(s); (2) authorized generic drugs, the definition
of which at section 1192(e)(2)(B)(ii) of the Act and proposed Sec.
429.20 (described further later in this section) includes unbranded
biological products that are marketed pursuant to such BLA(s); or (3)
MMA products imported under section 801(d)(1)(B) of the FD&C Act that
are marketed pursuant to such BLA(s). Any dosage forms and strengths of
the biological product with the same active ingredient that are
distributed by a private label distributor and marketed pursuant to
such BLAs would also be aggregated in the potential qualifying single
source drug of that BLA holder consistent with the policies for
implementation as described in, for example, section 30.1 of the
Negotiation Program Guidance.
Although assessing biological products on the basis of their active
ingredient is appropriate in most circumstances, we understand that a
discrete category of biological products--namely, vaccines for
infectious disease(s)--are more appropriately assessed using their
antigen component due to the evolving nature of pathogen strains over
time. Therefore, and as proposed at Sec. 429.125(b)(3), in the context
of vaccines for infectious disease(s), we would identify a potential
qualifying single source drug on the basis of such vaccines' antigen
component on such vaccines' labeling, as accessed in public sources
such as those discussed later in this section. We believe our proposal
to identify drugs based on their active moiety and biological products
based on their active ingredient, subject to the proposal for vaccines
for infectious disease(s), is the best reading of the statutory
directives in sections 1192(d)(3)(B), 1192(e), 1194(e)(1)(D), and
1196(a)(2) of the Act as they relate to identifying qualifying single
source drugs. We note further that in the context of drugs, ``active
moiety'' (as contrasted with ``active ingredient'') describes the
active molecule or ion in the drug, as this term excludes those
appended portions of the molecule that cause the drug to be an ester,
salt (including a salt with hydrogen or coordination bonds), or other
noncovalent derivative (such as a complex, chelate, or clathrate) of
the molecule.\27\ The term ``active moiety'' is not applicable in the
context of biological products, and it is thus appropriate to evaluate
biological products based on their active ingredient.
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\27\ See 21 CFR 314.3(b) (defining the terms ``active
ingredient'' and ``active moiety'').
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Consistent with the policies for implementation as described in
Negotiation Program Guidance, we are proposing to use public sources
such as, but not limited to, RxNorm, OpenFDA, FDALabel, DailyMed, and
FDA's Active Ingredient-Active Moiety Relationship/Basis of Strength
file to identify the active ingredient/active moiety/antigen component
of the drug or biological product. We may also consult with FDA as
appropriate, for example, to clarify whether a suffix or prefix in an
active moiety/active ingredient/antigen component name represents a
genuine difference in active moiety/active ingredient/antigen
component.
Section 1192(e)(2)(A) of the Act states that an authorized generic
drug and the qualifying single source drug that includes the listed
drug or reference product of that authorized generic drug shall be
treated as the same qualifying single source drug. An authorized
generic drug is defined in section 1192(e)(2)(B) of the Act and in
proposed Sec. 429.20 as: (1) in the case of a drug, an authorized
generic drug (as such term is defined in section 505(t)(3) of the FD&C
Act); and (2) in the case of a biological product, a product that has
been licensed under section 351(a) of the PHS Act \28\ and is marketed,
sold, or distributed directly or indirectly to the retail class of
trade under a different labeling, packaging (other than repackaging as
the reference product in blister packs, unit doses, or similar
packaging for institutions), product code, labeler code, trade name, or
trademark than the reference product. We are proposing at Sec.
429.125(b)(1)(iii) that a potential qualifying single source drug that
is a drug is inclusive of authorized generic drugs that are marketed
under the NDA(s) described therein, and at proposed Sec.
429.125(b)(2)(iii) that a potential qualifying single source drug that
is a biological product is inclusive of authorized generic drugs that
are marketed under the BLA(s) described therein.
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\28\ CMS is interpreting the reference to ``licensed under
section 351(a) of such Act'' to mean licensed or deemed licensed
under section 351(a) of the PHS Act. Section 351(a) of the PHS Act
addresses the licensure of a biological product.
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(1) Fixed Combination Drugs
At proposed Sec. 429.125(b)(4), for the purpose of identifying
potential qualifying single source drugs and subject to the narrow
modification for certain fixed combination drugs proposed at Sec.
429.125(b)(4)(i) to clarify our treatment of new formulations, we
[[Page 36258]]
propose that if a drug is a fixed combination drug (defined in proposed
Sec. 429.20) with two or more active moieties, active ingredients, or,
for vaccines for infectious disease(s), antigen components, the
distinct combination of active moieties, active ingredients, or antigen
components would generally be treated as one active moiety, active
ingredient, or antigen component. Therefore, all formulations with this
distinct combination offered by the same NDA/BLA holder would be
aggregated across all dosage forms and strengths of the fixed
combination drug (that is, all formulations and dosage forms and
strengths of this distinct combination would be considered the same
potential qualifying single source drug and, if applicable, CMS would
aggregate total expenditures for all such formulations and dosage forms
and strengths when determining whether such drug is a negotiation-
eligible drug or selected drug). Under this proposal, a product
containing only one (but not all) of the active moieties, active
ingredients, or antigen components that is offered by the same NDA/BLA
holder would generally not be aggregated with the formulations of the
fixed combination drug and would be considered a separate potential
qualifying single source drug. For example, a corticosteroid inhaler
would not be aggregated with a fixed combination inhaler from the same
NDA/BLA holder that contains the same corticosteroid combined with a
long-acting beta agonist. In this example, the corticosteroid inhaler
would be considered as a separate potential qualifying single source
drug from the fixed combination inhaler.
In the draft guidance for initial price applicability year 2028 and
manufacturer effectuation of the MFP in 2026, 2027, and 2028, we stated
our belief that treating distinct combinations of active moieties/
active ingredients as one active moiety/active ingredient for the
purpose of identifying potential qualifying single source drugs is
generally appropriate. However, we acknowledged that there may exist
fixed combination drugs for which one of the active ingredients or
active moieties contained is not biologically active against the
disease state(s) the drug is indicated for and thus does not result in
a clinically meaningful difference. We solicited comments on whether
the addition of drugs payable under Part B may impact the fixed
combination drug policy described in the draft guidance. In particular,
we solicited comments on how CMS might consider grouping such fixed
combination drug products with products containing at least one but not
all of the active moiety(ies)/active ingredient(s) into the same
potential qualifying single source drug for both drugs payable under
Part B and/or covered under Part D, including input on terminology that
could facilitate the effectuation of such a policy.
We received many comments in response to this comment solicitation.
Some commenters supported a modification to the fixed combination drug
policy as a way to close a loophole for manufacturers to avoid
selection by making minor changes to existing drugs, specifically
citing the addition of hyaluronidase to drugs payable under Part B.
Other commenters opposed such a modification, citing concerns that CMS
lacks the statutory authority to do so, that the approach described in
the comment solicitation does not align with how FDA regulates and
reviews the approvals of fixed combination drugs, or that CMS would not
be able to apply a consistent definition to the terminology described
in comment solicitation, including the terms ``biologically active
against the disease state'' or ``clinically meaningful difference''.
Some commenters raised concerns that the modification would potentially
harm patients and discourage the innovation of pharmaceutical
manufacturers. In the Negotiation Program Guidance, we stated that, due
to the complexity and scope of the issue as noted in the stakeholder
comments, we believed additional time would be necessary to develop
objective policy criteria if we were to finalize such a policy, and
thus did not make a change to the fixed combination drug policy in the
Negotiation Program Guidance. We stated our intent to address the
program integrity risk posed by certain fixed combination drugs and
that we were continuing to consider appropriate policy to potentially
propose in rulemaking for initial price applicability year 2029 and
subsequent years.
Since publishing the Negotiation Program Guidance, we have
continued to consider program integrity risks posed by certain fixed
combination drugs. Specifically, we are aware of a program integrity
risk in which, under Negotiation Program policies for identifying
qualifying single source drugs set forth in guidance with respect to
previous initial price applicability years, a manufacturer may avoid
selection of a qualifying single source drug or, in the case that a
qualifying single source drug becomes a selected drug, avoid the
application of the MFP, by marketing a new formulation of the
qualifying single source drug that includes, in addition to the active
moiety(ies)/active ingredient(s)/antigen component(s) in the original
qualifying single source drug, an active moiety, antigen component, or
active ingredient, such as hyaluronidase, that enables an alternative
route of administration for the shared active moiety(ies)/active
ingredient(s)/antigen component(s) in the original qualifying single
source drug. Under the general fixed combination drug policy set forth
in guidance with respect to previous initial price applicability years,
including, for example, section 30.1 of the Negotiation Program
Guidance with respect to initial price applicability year 2028, CMS is
aware that such a manufacturer may avoid having all dosage forms and
strengths of a drug, including the new formulation of such drug, with
its active moiety(ies)/active ingredient(s)/antigen component(s)
included in a qualifying single source drug in instances in which a new
formulation differs from other formulations of the qualifying single
source drug based on the inclusion of an additional active moiety/
active ingredient/antigen component that enables an alternative route
of administration for the shared active moiety(ies)/active
ingredient(s)/antigen component(s).
In this scenario, we are concerned that application of CMS' general
fixed combination drug policy would be in tension with statutory
requirements under sections 1192(d)(3)(b) and 1196(a)(2) of the Act
because we would not aggregate together the original qualifying single
source drug and the new formulation containing the additional active
moiety/active ingredient/antigen component, even though these may be
appropriately understood as different formulations of the same drug
under sections 1192(d)(3)(B) and 1196(a)(2) of the Act.
First, application of the general fixed combination drug policy to
such products would be in tension with section 1192(d)(3)(B) of the Act
in the course of drug selection because we would not treat the original
qualifying single source drug and the new formulation containing the
additional active moiety/active ingredient/antigen component as one
qualifying single source drug. Thus, when determining whether a
qualifying single source drug is a negotiation-eligible drug, as
proposed at Sec. 429.115, we would calculate the combined total
expenditures under Part B and Part D separately for the original
qualifying single source drug and the new formulation. We believe that
separately calculating total expenditures for such products under these
circumstances
[[Page 36259]]
may be inconsistent with the statutory direction at section
1192(d)(3)(B) of the Act to use data that is aggregated across dosage
forms and strengths of the drug, including new formulations of the
drug, in determining whether a qualifying single source drug is a
negotiation-eligible drug. Because under the general fixed combination
drug policy we would evaluate the original qualifying single source
drug and the new formulation separately during the drug selection
process, the time since approval or licensure (determined as proposed
at Sec. 429.125(c)) for the new formulation would likely be later than
for the original qualifying single source drug, thereby extending the
years before which the new formulation could potentially be selected
and, if selected and if an MFP is agreed to, be subject to an MFP. This
dynamic presents program integrity risks because evaluating the time
since approval or licensure separately for the original qualifying
single source drug and the new formulation and splitting combined total
expenditures under Part B and Part D between such products could lead
to a scenario where the original qualifying single source drug or the
new formulation or both are never selected or are not selected until a
future initial price applicability year, which would reduce or delay
the ability of the Negotiation Program to negotiate MFPs for high
expenditure, single source drugs and biological products.
Second, if the original qualifying single source drug is selected
for negotiation, and a negotiated MFP is agreed upon for that drug, the
general fixed combination drug policy may be in tension with section
1196(a)(2) of the Act, which directs CMS to apply the MFP across
different strengths and dosage forms of a selected drug and not based
on the specific formulations or package size or package type of such
drug, because the MFP would not apply to the new formulation. This
dynamic presents further program integrity risks. If the new
formulation is not part of the selected drug, then the Primary
Manufacturer would be able to market the new formulation without the
new formulation being subject to MFP effectuation requirements, thereby
creating a new incentive for the Primary Manufacturer to drive patient
utilization toward the new formulation and circumvent the application
of the MFP to the original qualifying single source drug for such
patients.
To address these program integrity risks, and to clarify how CMS
interprets sections 1192(d)(3)(B) and 1196(a)(2) of the Act as applied
to new formulations of a drug, including in the context of fixed
combination drugs, we are proposing at Sec. 429.125(b)(4)(i) a narrow
modification to the application of the general fixed combination drug
policy: if CMS determines that a fixed combination drug with two or
more active moiety(ies), active ingredient(s), or, for a vaccine for
infectious disease(s), antigen component(s) shares one or more active
moiety(ies), active ingredient(s), or antigen component(s) with another
drug or biological product(s) with the same NDA/BLA holder, and such
products differ in active moiety(ies), active ingredient(s), or antigen
component(s) due to the inclusion of an active moiety, active
ingredient, or antigen component that creates a new formulation and
enables an alternative route of administration for the co-administered
active moiety(ies), active ingredient(s), or antigen component(s), CMS
would, for purposes of identifying the potential qualifying single
source drug under proposed Sec. 429.125(b)(1) and (b)(2), use all
dosage forms and strengths of the drug or biological product with the
shared moiety(ies), active ingredient(s), or antigen component(s) and
the same NDA/BLA holder. In other words, we would identify the
potential qualifying single source drug as including all dosage forms
and strengths with the shared active moiety(ies), active ingredient(s),
or antigen component(s) that is offered by the same NDA/BLA holder. An
example is the inclusion of active ingredient X with a different active
ingredient Y, where active ingredient X creates a new formulation and
enables an alternative route of administration for active ingredient Y.
In the described example and as set forth in proposed Sec.
429.125(b)(4)(i), CMS would identify the potential qualifying single
source drug using all dosage forms and strengths of the drug or
biological product that contain active ingredient Y and share the same
BLA holder.\29\
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\29\ If a drug product or biological product included active
moiety/active ingredient/antigen component X, active moiety/active
ingredient/antigen component Y, and an additional active moiety/
active ingredient/antigen component Z that did not meet the criteria
set forth in proposed Sec. 429.125(b)(4)(i), CMS would not include
such drug product or biological product under the same potential
qualifying single source drug.
---------------------------------------------------------------------------
We are proposing the policy at Sec. 429.125(b)(4)(i) at this time
because the program integrity concerns this policy would address relate
primarily to biologics that are more likely payable under Part B, and
drugs were not selected based on total expenditures under Part B until
initial price applicability year 2028. The program integrity concerns
raised by fixed combination drugs that are new formulations have not
yet impacted drug selection but may soon as more drugs with significant
total expenditures under Part B become qualifying single source drugs
and negotiation-eligible drugs. We do not believe that significant
reliance interests have arisen around the fixed combination policy
established in Negotiation Program guidance for initial price
applicability years 2026 through 2028, as incentives for pharmaceutical
manufacturers to develop new formulations like the ones we propose to
address in this policy long predate the Negotiation Program. In the
absence of this proposed policy, however, pharmaceutical manufacturers
may have increased incentives under Negotiation Program policy to drive
patient utilization toward new formulations that would be treated as
distinct qualifying single source drugs, and if selected, as distinct
selected drugs.
This proposal incorporates feedback from commenters that raised
concerns about how we would operationalize terms used in the draft
guidance for initial price applicability year 2028 and manufacturer
effectuation of the MFP in 2026, 2027, and 2028, such as ``biologically
active against the disease state''. We understand from these
commenters' concerns the importance of developing a modification to the
general fixed combination drug policy that is narrowly tailored to the
development of new formulations that pose program integrity concerns
and does not group products together under the same potential
qualifying single source drug beyond what the statute permits.
Additionally, we understand the importance of developing criteria that
allow the narrow modification to be operationalized in a consistent and
objective manner over a large set of active moieties/active
ingredients/antigen components. We believe that the terminology
proposed at Sec. 429.125(b)(4)(i) would achieve both these goals.
First, we believe the criteria proposed at Sec. 429.125(b)(4)(i)
can be operationalized in a consistent and objective manner using
public sources. Specifically, we are proposing to use public sources
such as, but not limited to, RxNorm, OpenFDA, FDALabel, DailyMed, and
FDA's Active Ingredient-Active Moiety Relationship/Basis of Strength
file to identify the active moiety(ies)/active ingredient(s)/antigen
component(s) of the drug or biological products, as described in
section II.B.6.a. of this proposed rule, and to use public sources such
as, but not limited
[[Page 36260]]
to, Orange Book, Purple Book, Drugs@FDA, and DailyMed to identify the
routes of administration of the fixed combination drug and the drug or
biological product with the same NDA/BLA holder that shares one or more
active moiety(ies)/active ingredient(s)/antigen component(s) with the
fixed combination drug. We may also consult with FDA, as appropriate.
We solicit comments on recommended approaches to inform CMS
identification of active moiety(ies)/active ingredient(s)/antigen
component(s) that enable a new route of administration for co-
administered active moiety(ies)/active ingredient(s)/antigen
component(s), including what types of information or descriptions we
should look for within product labeling when identifying such cases.
Second, focusing on active moieties/active ingredients/antigen
components that enable an alternative route of administration would
reduce the number of products qualifying for the narrow modification as
compared to the previous language citing active moieties/active
ingredients not biologically active against the disease state(s) for
which the drug is indicated. For example, we believe that the
terminology proposed at Sec. 429.125(b)(4)(i) would currently only
impact biological products licensed in BLAs.
In developing this proposed policy, CMS also considered other
feedback from commenters on our prior proposal to modify our fixed
combination drug policy. As we noted in the Negotiation Program
Guidance, many commenters raised concerns that a modification to CMS'
fixed combination drug policy would not align with how FDA regulates
and reviews the approvals of fixed combination drugs. We considered
this feedback but maintain that the language at proposed Sec.
429.125(b)(4)(i) clarifies how CMS would comply with sections
1192(d)(3)(B) and 1196(a)(2) of the Act for fixed combination drugs
that are new formulations, and the commenters' suggestion that CMS must
treat fixed combination drugs in the same manner as what such
commenters assert is how the FDA may treat such products under FDA
authorities is not persuasive in this instance. This proposal to
identify such products as a single potential qualifying single source
drug reflects CMS' proposed interpretation of sections 1192(d)(3)(B)
and 1196(a)(2) of the Act and would solely be for the purposes of
implementing the Negotiation Program.
We also considered comments on how a modification to CMS' fixed
combination drug policy would potentially impact pharmaceutical
innovation. Although a few commenters stated a modification to the
fixed combination drug policy would potentially harm patients by
discouraging the innovation of pharmaceutical manufacturers, another
commenter noted that manufacturers already have substantial financial
motivations beyond the Negotiation Program to pursue the development of
new formulations--including new formulations that are fixed combination
drugs--to delay generic or biosimilar competition. We agree with this
latter argument and note further our belief that the policy proposed at
Sec. 429.125(b)(4)(i) would effectuate section 1192(d)(3)(B) and
1196(a)(2) of the Act, address the program integrity concerns in the
Negotiation Program that we and commenters have identified, while not
meaningfully impacting incentives for innovation. We also reiterate our
statement in the Negotiation Program Guidance that we are committed to
a negotiation process that recognizes the clinical benefit of products,
including products with different dosage forms and strengths,
formulations or routes of administration from other products that are
aggregated as part of the same qualifying single source drug, and we
direct readers to proposed Sec. 429.510(e) and section II.F.3.d.1. of
this proposed rule for discussion of CMS' approach to adjusting the
starting point for an initial offer based on section 1194(e)(2)
factors, which includes factors related to clinical benefit as compared
to therapeutic alternatives.
(2) Alternatives Considered
We considered expressly limiting the proposed modification of the
application of the general fixed combination drug policy to biological
products (other than vaccines for infectious disease(s) identified at
proposed Sec. 429.125(b)(3)), as currently such biological products
licensed in BLAs pose the program integrity risks of which we are
currently aware. However, in line with our aim to apply the statutory
requirements at sections 1192(d)(3)(B) and 1196(a)(2) of the Act
equally to all new formulations of a drug, whether the new formulation
is approved in an NDA or licensed in a BLA, and to account for the
possibility that the narrow modification for fixed combination drugs
proposed at Sec. 429.125(b)(4)(i) could apply to drugs in the future,
we are not proposing to limit the proposed modification to these
biological products. This approach would ensure that we are treating
new formulations equally, whether that new formulation is a drug or
biological product.
We also considered proposing an alternative modification to the
general fixed combination drug policy that would target the program
integrity risk as described in the Negotiation Program Guidance wherein
CMS identification of potential qualifying single source drugs under
the fixed combination drug policy would not take into account an active
moiety, active ingredient, or antigen component that is not
biologically active against the disease state(s) the drug is indicated
for and thus does not result in a clinically meaningful difference from
other drug or biological products that otherwise have the same active
moiety(ies)/active ingredient(s)/antigen component(s). However, we are
instead proposing to focus on products that differ in active
moiety(ies)/active ingredient(s)/antigen component(s) due to the
inclusion of an active moiety/active ingredient/antigen component that
creates a new formulation and enables an alternative route of
administration for the co-administered active moiety(ies)/active
ingredient(s)/antigen component(s). As noted in section II.B.6.a.1. of
this proposed rule, we believe the proposed approach narrowly addresses
the program integrity risks with the general fixed combination policy
and the specific elements of the policy that are in tension with
section 1192(d)(3)(B) of the Act, which directs CMS to aggregate across
dosage forms and strengths, including new formulations of the drug, and
section 1196(a)(2) of the Act, which directs CMS to apply the MFP
across different strengths and dosage forms of a selected drug and not
based on the specific formulations or package size or package type of
such drug.
We considered maintaining the policy established for initial price
applicability years 2026 through 2028, wherein, for a fixed combination
drug with two or more active moieties/active ingredients/antigen
components, we would treat the distinct combination of active moieties/
active ingredients/antigen components as one active moiety/active
ingredient/antigen component. However, for the reasons described in
section II.B.6.a.1. of this proposed rule, we believe that this policy
poses program integrity risks and is in tension with sections
1192(d)(3)(B) and 1196(a)(2) of the Act.
Finally, we considered proposing policy to address program
integrity risks posed by co-packaged drugs. In the Negotiation Program
Guidance, we stated that the general fixed combination drug policy
would apply to a co-packaged drug, in which two active moieties/active
ingredients are not co-
[[Page 36261]]
formulated but rather co-packaged and sold in a single package, but
that we may address co-packaged drugs in rulemaking for initial price
applicability year 2029 and subsequent years. That is, for purposes of
the Negotiation Program in initial price applicability year 2028, if a
drug (including a co-packaged drug) contained two or more active
moieties/active ingredients/antigen components, the distinct
combination of active moieties/active ingredients/antigen components
would be considered as one active moiety/active ingredient/antigen
components for the purpose of identifying potential qualifying single
source drugs, whether such drug was co-formulated or co-packaged. After
further consideration, and based on our assessment that at this time
co-packaged drugs do not appear to pose substantive program integrity
risks to the Negotiation Program because manufacturers are not adopting
co-packaging practices that abuse current program policies, we are
proposing that the general fixed combination drug policy at proposed
Sec. 429.125(b)(4) continue to apply to co-packaged drugs. We are
monitoring this approach and potential gaming of co-packaged drugs and
may consider revisiting this policy in the future.
We solicit comments on our proposal and these alternatives.
b. Time Since Approval or Licensure (Sec. 429.125(c))
In accordance with section 1192(e)(1) of the Act and consistent
with policies for implementation as described in Negotiation Program
Guidance, and accounting for the treatment of certain former orphan
drugs in accordance with section 1192(e)(4) of the Act as addressed in
proposed Sec. 429.125(c)(3), we are proposing at Sec. 429.125(c)(1)
and (c)(2) that at least 7 years (for drugs) or 11 years (for
biological products) must have elapsed between the FDA date of approval
or licensure of the potential qualifying single source drug identified
at proposed Sec. 429.125(b) and the selected drug publication date
with respect to an initial price applicability year. To determine the
date of approval for a potential qualifying single source drug that is
a drug with more than one FDA application number, we would use the
initial date of approval associated with the earliest-approved FDA
application belonging to the NDA holder and containing the active
moiety (or in the case of a potential qualifying single source drug
identified under the general fixed combination drug policy proposed at
Sec. 429.125(b)(4), for the distinct combination of active moieties).
For a potential qualifying single source drug identified under Sec.
429.125(b)(4)(i) that is a drug, we would use the initial date of
approval associated with the earliest-approved FDA application
belonging to the NDA holder and containing the shared active
moiety(ies) used to identify the potential qualifying single source
drug. To determine the date of licensure for a potential qualifying
single source drug that is a biological product (except in the case of
a vaccine for infectious disease(s), for which we would determine the
date of licensure as described later in this section) with more than
one FDA application number, we would use the initial date of licensure
associated with the earliest-approved FDA application belonging to the
BLA holder and containing the active ingredient (or in the case of a
potential qualifying single source drug identified under the general
fixed combination drug policy proposed at Sec. 429.125(b)(4), for the
distinct combination of active ingredients). For a potential qualifying
single source drug identified under Sec. 429.125(b)(4)(i) that is a
biological product, we would use the initial date of licensure
associated with the earliest-approved licensure of the FDA application
belonging to the BLA holder and containing the shared active
ingredient(s) used to identify the potential qualifying single source
drug.\30\ Consistent with prior initial price applicability years, we
are also proposing that the identification of the earliest-approved FDA
application belonging to the NDA/BLA holder and containing the active
moiety/active ingredient, respectively, would be made irrespective of
whether the indication(s) approved in such NDA/BLA were or are covered
under Part D or payable under Part B or both. We would determine
whether a product is not covered under Part D or payable under Part B
at the NDC-11 level via the Primary Manufacturer's submission of
information on NDC-11s as proposed at Sec. 429.100(d) and described in
section II.B.1. of this proposed rule.
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\30\ The determination of the date of licensure for a potential
qualifying single source drug that is a biological product,
including a potential qualifying single source drug identified under
Sec. 429.125(b)(4)(i), is subject to the proposals at Sec.
429.125(c)(2)(i) and (c)(2)(ii) for a biological product that is a
vaccine for infectious diseases, and a biological product with an
approved NDA that was deemed to be a BLA.
---------------------------------------------------------------------------
As described in section II.B.6.a. of this proposed rule, to give
full effect to all relevant provisions of the statute, including
sections 1192(d)(3)(B), 1192(e), 1194(e)(1)(D), and 1196(a)(2) of the
Act, we are proposing to identify a potential qualifying single source
drug using the specific constituent dosage forms and strengths that are
identified as aggregated under the same NDA/BLA holder for the same
active moiety/active ingredient, inclusive of products that are
marketed under different NDAs/BLAs. Therefore, to identify the date of
approval or licensure, as applicable, for a potential qualifying single
source drug with more than one FDA application, sections
1192(e)(1)(A)(ii) and 1192(e)(1)(B)(ii) of the Act require CMS to use
the initial approval or licensure date associated with the earliest-
approved FDA application for such potential qualifying single source
drug to ensure that CMS captures the full time since the earliest
product in the potential qualifying single source drug was approved or
licensed.
To provide an example for how we would determine the approval or
licensure date set forth at proposed Sec. 429.125(c)(1) and (c)(2),
respectively, the selected drug publication date for initial price
applicability year 2029 is February 1, 2027, consistent with section
1191(b)(3) of the Act and proposed Sec. 429.20. As such, for initial
price applicability year 2029, the initial date of approval for a drug
to be considered a qualifying single source drug must have been on or
before February 1, 2020, and the initial date of licensure for a
biological product to be considered a qualifying single source drug
must have been on or before February 1, 2016.
We are aware that some manufacturers of vaccines for infectious
disease(s) update the antigen component(s) of their products through
supplemental BLAs. Consistent with the policies for implementation as
described in Negotiation Program Guidance, for each unique potential
qualifying single source drug that CMS identifies based on its antigen
component(s) in accordance with proposed Sec. 429.125(b)(3), we are
proposing at Sec. 429.125(c)(2)(i) that CMS will use the initial date
of licensure for any BLA or supplemental BLA for that unique potential
qualifying single source drug for purposes of identifying the starting
date from which to measure the 11 years described in proposed Sec.
429.125(c)(2).
Additionally, consistent with the policies for implementation as
described in Negotiation Program Guidance and as proposed in Sec.
429.125(c)(2)(ii), for biological products with an approved NDA that
was deemed to be a BLA on March 23, 2020, in accordance with section
7002(e)(4)(A) of Biologics Price Competition and Innovation Act of 2009
(BPCI Act), and that are currently licensed biological products under
[[Page 36262]]
section 351 of the PHS Act (hereinafter ``deemed biologics''), we would
consider March 23, 2020 to be the licensure date for purposes of
identifying the starting date from which to measure the 11 years
described in proposed Sec. 429.125(c)(2).\31\
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\31\ For a biological product with an approved application under
section 505(c) of the FD&C Act that was deemed to be a BLA under
section 7002(e)(4)(B) of the BPCI Act, as amended by the Further
Consolidated Appropriations Act of 2020, we would consider the
approval date determined in accordance with section 7002(e)(4)(B) of
the BPCI Act to be the licensure date for purposes of identifying
the time since licensure under section 1192(e)(1)(B)(ii) of the Act.
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In accordance with section 1192(e)(4) of the Act and as proposed at
Sec. 429.125(c)(3), if, as of the date of a drug or biological
product's initial approval or licensure, such drug or biological
product met or meets the criteria for the orphan drug exclusion
proposed at Sec. 429.125(e)(1), we would measure the 7- and 11-year
periods identified in proposed Sec. 429.125(c)(1) and (c)(2) starting
from the first day after such initial date of approval or licensure
that such drug or biological product does not, or did not, meet the
criteria for the orphan drug exclusion at proposed Sec. 429.125(e)(1).
We would identify this day as the earlier of (1) the date on which the
FDA approves such drug or biological product for an indication for a
disease or condition that is not a rare disease or condition for which
the drug or biological product is designated under
[…truncated; see source link]Indexed from Federal Register on June 16, 2026.
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