Rule2026-22792
Medicare Drug Price Negotiation Program and Medicare Prescription Drug Benefit Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 9, 2026
Effective
December 5, 2026
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This rule finalizes and codifies the Medicare Drug Price Negotiation Program ("Negotiation Program") and establishes certain new policies for the Negotiation Program and the Medicare Prescription Drug Benefit Program ("Part D Program") as required by the Inflation Reduction Act of 2022. This final rule also finalizes a proposed policy for specific fixed combination drugs that are new formulations.
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[Federal Register Volume 91, Number 215 (Monday, November 9, 2026)]
[Rules and Regulations]
[Pages 72176-72390]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22792]
[[Page 72175]]
Vol. 91
Monday,
No. 215
November 9, 2026
Part IV
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; Final Rule
Federal Register / Vol. 91 , No. 215 / Monday, November 9, 2026 /
Rules and Regulations
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 423 and 429
[CMS-4215-F]
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: Final rule.
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SUMMARY: This rule finalizes and codifies the Medicare Drug Price
Negotiation Program (``Negotiation Program'') and establishes certain
new policies for the Negotiation Program and the Medicare Prescription
Drug Benefit Program (``Part D Program'') as required by the Inflation
Reduction Act of 2022. This final rule also finalizes a proposed policy
for specific fixed combination drugs that are new formulations.
DATES:
Effective date: These regulations are effective on December 5,
2026.
Applicability date: These regulations are applicable to the
Negotiation Program beginning with respect to initial price
applicability year 2029 and to Part D Program coverage beginning
January 1, 2029.
FOR FURTHER INFORMATION CONTACT: Elisabeth Daniel,
<a href="/cdn-cgi/l/email-protection#e5acb7a4b78087849180848b81ab80828a918c84918c8a8ba5868896cb8d8d96cb828a93"><span class="__cf_email__" data-cfemail="cf869d8e9daaadaebbaaaea1ab81aaa8a0bba6aebba6a0a18faca2bce1a7a7bce1a8a0b9">[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
A. Executive Summary
1. Purpose
This final rule finalizes and codifies 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 final rule also finalizes and codifies 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'') as well as 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 are codifying policies established in final guidance for the
Negotiation Program \1\ in regulatory text. Specifically, we are
codifying, 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.
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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 are codifying new policies for the Medicare Drug
Price Negotiation Program as follows:
<bullet> Finalizing Sec. 429.125(b)(4)(ii) regarding treatment of
specific fixed combination drugs in our determinations of qualifying
single source drugs. In this section, we are establishing a policy for
specific fixed combination drugs that we determine are new formulations
of existing drugs. Under this policy, 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), 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), 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), or antigen component(s) that are offered by the same
NDA/BLA holder.
<bullet> Finalizing Sec. 429.125(c)(3)(i), to clarify how CMS will
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> Finalizing Sec. 429.130, to 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> Finalizing Sec. 429.210(c), to provide additional details
related to the Primary Manufacturer transfer of responsibility for all
requirements of the Negotiation Program Agreement to an acquiring
entity.
<bullet> Finalizing Sec. 429.415(a)(2) and Sec.
429.510(d)(2)(ii), to explain how CMS will calculate the 30-day
equivalent supply for a selected drug or therapeutic alternative,
respectively, payable under Part B that is typically administered one
time (for example, some vaccines, gene therapies, and cancer
therapies).
<bullet> Finalizing Sec. 429.440 with modifications, to explain
how CMS will implement the Temporary Floor for Small Biotech Drugs for
initial price applicability years 2029 and 2030. We are modifying our
proposed stepwise approach, at Sec. 429.440(b)(4), for calculating a
selected drug's ceiling in the event that certain ceiling amounts are
below the Temporary Floor for Small Biotech Drugs.
<bullet> Finalizing Sec. Sec. 429.605 and 429.610 with
modifications, to 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.
Unless otherwise specified, CMS finalizes 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 final 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. In this final rule, unless otherwise specified,
references hereinafter to ``the revised guidance for initial price
applicability year 2026'' are to the Medicare Drug Price Negotiation
Program: Revised Guidance, Implementation of Sections 1191-1198 of the
Social Security Act for Initial Price Applicability Year 2026 that was
published by CMS on June 30, 2023. Additionally, in this final rule,
unless otherwise specified, references
[[Page 72177]]
hereinafter to ``the final guidance for initial price applicability
year 2027'' are to the Medicare Drug Price Negotiation Program: Final
Guidance, Implementation of Sections 1191-1198 of the Social Security
Act for Initial Price Applicability Year 2027 and Manufacturer
Effectuation of the Maximum Fair Price in 2026 and 2027 that was
published by CMS on October 2, 2024.
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 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 final
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 finalizes 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 final
rule. However, the definition of an eligible small biotech drug for
purposes of the calculation of the Temporary Floor for Small Biotech
Drugs on the maximum fair price for small biotech drugs under section
1194(d) of the Act is included in this final rule (as described in more
detail in section II.E.2. of this final rule).
3. Summary of Costs and Benefits
We are finalizing new policies for the Negotiation Program as
follows: a policy for specific fixed combination drugs that are 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 VI. of this
final 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 final rule to the ``MFP''
include a renegotiated MFP. 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)(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 or
payable under Part B or both for initial price applicability year
2028.\4\ The Secretary will select up to 20 drugs covered under Part D
or payable under Part B or both 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
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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> In the final rule, we
proposed to codify these requirements at parts 423 and 429 to title 42,
chapter IV of the Code of Federal Regulations (CFR) to implement
sections 11001 and 11002 of the IRA. The effective date of the
finalized provisions is discussed in section I.A.5. of this final 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. Publication of the Proposed Rule and General, Out-of-Scope, and
Within Scope Public Comments
1. Publication of the Proposed Rule
In response to the Medicare Drug Price Negotiation Program and
Medicare Prescription Drug Benefit Program proposed rule (91 FR 36236
through 36368) (``proposed rule''), we received approximately 11,330
timely comment letters containing a variety of feedback and
recommendations on the proposed rule and the information collection
requests (ICRs) contained within the proposed rule.
2. General Comments
We received general comments on the Negotiation Program proposed
rule. The following is a summary of the general comments we received
and our responses.
Comment: Many commenters expressed general support for the
Negotiation Program and the proposed policies.
Response: We thank commenters for their support.
Comment: Some commenters expressed general opposition to the
Negotiation Program and the proposed policies.
Response: We appreciate the commenters for sharing their concern.
Comment: Some commenters noted that codifying policies of the
Negotiation Program in regulation should not be an opportunity for CMS
to expand the program requirements. A commenter urged CMS to assess
whether proposed policies are consistent with statute, supported by
reasoned decision making, and responsive to stakeholder comments as it
implements the Negotiation Program.
Response: We appreciate this input and note that we have pursued
implementation in accordance with the statutory requirements of the
Negotiation Program. We appreciate the comments received from
interested parties on the proposed rule. We read and responded to all
significant comments received timely.
Comment: Many commenters expressed concern about the impact of the
Negotiation Program on innovation and drug development, as well as
concern about creating uncertainty in the pharmaceutical market. A few
commenters recommended CMS continue to be transparent as it implements
the Negotiation Program, and one of these commenters noted that CMS
should adopt clear standards, consistent definitions, and predictable
procedures across the Negotiation Program. A couple of commenters
recommended CMS monitor and report on the impact of the Negotiation
Program on patient access to prescription drugs.
Response: We thank these commenters for their input. Although the
U.S. prescription drug market is the largest in the world--with a track
record of fostering innovation--patients in the United States generally
pay more for prescription drugs than anywhere else.\12\ We believe the
Negotiation Program will make prescription drugs more affordable for
people with Medicare and the Medicare program--without restricting
innovation and new product research and development.<SUP>13 14</SUP> We
also expect the Negotiation Program to encourage drug manufacturers to
create business models to stay competitive, fostering the development
of new treatments. Only drugs that have been approved by the Food and
Drug Administration (FDA) for at least 7 years and only biological
products that have been licensed by the FDA for at least 11 years are
eligible for selection as part of the Negotiation Program, unless they
are otherwise excluded in accordance with statute. With the
implementation of the Negotiation Program, we believe prescription
drugs will be more affordable, allowing more patients to purchase those
prescription drugs and adhere to their medications. As a result,
prescription drug sales likely will continue to grow and drug
manufacturers will reap the rewards of more patients being able to
afford their medications.
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\12\ Assistant Secretary for Planning and Evaluation,
``International Prescription Drug Price Comparisons: Estimates Using
2022 Data,'' February 2024, see: <a href="https://aspe.hhs.gov/sites/default/files/documents/277371265a705c356c968977e87446ae/international-price-comparisons.pdf">https://aspe.hhs.gov/sites/default/files/documents/277371265a705c356c968977e87446ae/international-price-comparisons.pdf</a>.
\13\ Conti, Rena M., Richard G. Frank, and David M. Cutler,
``The Myth of the Free Market for Pharmaceuticals,'' The New England
Journal of Medicine, vol. 390, no. 16, April 20, 2024.
\14\ Novo Nordisk et al. v. Becerra et al., brief amicus curiae
of economists and scholars of health policy, Feb. 2, 2024, <a href="https://litigationtracker.law.georgetown.edu/wp-content/uploads/2023/10/Novo-Nordisk_2024.02.02_Amicus-Brief-Economists-and-Health-Policy-Scholars.pdf">https://litigationtracker.law.georgetown.edu/wp-content/uploads/2023/10/Novo-Nordisk_2024.02.02_Amicus-Brief-Economists-and-Health-Policy-Scholars.pdf</a>.
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3. Out of Scope Comments
Many comments, including those related to implementation of
policies and processes of maximum fair price (MFP) effectuation, such
as operations of the Medicare Transaction Facilitator (``MTF''), were
out of scope for purposes of this rulemaking.
4. Within Scope Comments
Summaries of the public comments within the scope of the proposed
rule and our responses to those public comments are provided in the
various sections of this final rule under the appropriate heading.
Commenters included drug manufacturers and their trade associations,
patient advocacy organizations, thought leaders, pharmacies and their
trade associations, health plans, pharmacy benefit managers and their
trade association,
[[Page 72179]]
and individuals. A summary of the major issues and our responses
follow.
D. Waiver of Delay in Effective Date
The Congressional Review Act (CRA) generally requires that the
effective date of a major rule be 60 days after the rule is published
in the Federal Register. 5 U.S.C. 801(a)(3)(A)(ii). The CRA allows an
agency to issue a rule that would otherwise be subject to a 60-day
delayed effective date requirement with an effective date at such time
as the Federal agency promulgating the rule determines in circumstances
where notice and public procedure are impractical, unnecessary, or
contrary to the public interest (5 U.S.C. 808(2)).
CMS is waiving the 60-day delay in the effective date for this rule
to allow it to meet the statutory deadline of February 1 for
publication of the selected drug list (as required by sections 1192(a)
and 1191(b)(3) of the Act), and avoid an infeasible scenario where CMS
must wait until 60 days after the date the rule is published in the
Federal Register to close the collection of Initial Delay Requests from
Biosimilar Manufacturers (CMS-10844, OMB 0938-1452, Expiration 11/30/
2028) as we are finalizing in Sec. 429.110. To meet the statutory
deadline of February 1 for publication of the selected drug list (as
required by sections 1192(a) and 1191(b)(3) of the Act), based on
experience from initial price applicability years 2026, 2027, and 2028,
CMS needs a minimum of approximately seven weeks to conduct the review
process for Initial Delay Requests, as specified in section 1192(f) of
the Act. The volume of Initial Delay Requests we receive varies by
year, as well as the scope and complexity of review, since each
application presents unique drug-specific considerations. Collecting
and reviewing Initial Delay Requests in January 2027 without a waiver
of the 60-day delay in the effective date would be infeasible for CMS
to make determinations with respect to such requests, as CMS would have
insufficient time to: (1) review such request(s); (2) request
additional information and documents from the Biosimilar Manufacturer
necessary to make determinations (if applicable); (3) allow a
Biosimilar Manufacturer time to produce and submit to CMS the requested
information (consistent with section 1192(f)(1)(B)(ii)(II) of the Act);
and (4) review the additional information and documents submitted by
Biosimilar Manufacturers to determine whether the selection of a
negotiation-eligible drug that includes the reference product for the
Biosimilar should be delayed, before the statutory deadline of February
1 for publication of the selected drug list (as required by sections
1192(a) and 1191(b)(3) of the Act).
Review of an Initial Delay Request may require CMS to consider a
substantial volume of technical information, and potentially request
additional information from the Biosimilar Manufacturer, in order to
make a determination. For example, in reviewing an Initial Delay
Request pursuant to section 1192(f) of the Act, CMS must, among other
actions, determine whether there is a high likelihood that the
Biosimilar Manufacturer's Biosimilar will be licensed and marketed
under section 351(k) of the Public Health Service Act before the date
that is 2 years after the selected drug publication date with respect
to such initial price applicability year for which a reference drug
would be included on the selected drug list absent a successful Initial
Delay Request (the High Likelihood Deadline). CMS must also, among
other actions, determine that the Biosimilar Manufacturer and the
Reference Manufacturer have not entered into an agreement that (1)
requires or incentivizes the Biosimilar Manufacturer to submit an
Initial Delay Request or (2) directly or indirectly restricts the
quantity of the Biosimilar that may be sold in the United States over a
specified period of time.
As part of the Initial Delay Request, the Biosimilar Manufacturer
must submit all agreements related to the Biosimilar filed with the
Federal Trade Commission (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, and to
the extent available, the manufacturing schedule for the Biosimilar
submitted to FDA during its review of the application for licensure and
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.
In this example, CMS must review the aforementioned materials to
determine whether there is a high likelihood that the Biosimilar will
be licensed and marketed before the High Likelihood Deadline and
whether there are any agreements between the Biosimilar Manufacturer
and Reference Manufacturer that would require the denial of the Initial
Delay Request. If CMS began reviewing Initial Delay Requests in January
2027, CMS would have insufficient time for the following actions before
the February 1 statutory publication deadline for the selected drug
list. First, CMS must review the applicable agreements filed with the
FTC or the Assistant Attorney General, any manufacturing schedule for
the Biosimilar submitted to the FDA, and applicable disclosures
pertaining to the marketing of the Biosimilar. Second, CMS may need to
submit follow up requests to Biosimilar Manufacturers where, for
example, the information and documents provided are insufficient for
determining whether any agreement(s) violate the statutory requirements
for granting the Initial Delay Requests, or where the information and
documents provided do not establish clear and convincing evidence as
required by statute that the Biosimilar will be marketed before the
High Likelihood Deadline. Third, CMS would need to provide the
Biosimilar Manufacturer with adequate time to produce and submit to CMS
additional information and documents regarding the agreements and
marketing of the Biosimilar before the High Likelihood Deadline.
Fourth, CMS must review this additional information and documents
provided by the Biosimilar Manufacturer to determine if the agreements
violate the statutory requirements for granting the Initial Delay
Request, and whether there is clear and convincing evidence that the
Biosimilar will be marketed before the High Likelihood Deadline. These
determinations must be made before the February 1 statutory publication
deadline for the selected drug list.
In this example, CMS believes that completing these actions as part
of the review of Initial Delay Requests to determine whether the
selection of a negotiation-eligible drug should be delayed by one year
before the February 1 statutory publication deadline for the selected
drug list would be infeasible if CMS began reviewing Initial Delay
Requests in January 2027.
In recognition of these timing requirements, such requests must be
due by a date specified by CMS, which would be no later than the end of
December of the calendar year prior to the selected drug publication
date. A 60-day delay for completion of data collection, after the date
of publication
[[Page 72180]]
in the Federal Register, would be in direct conflict with this
provision.
Specifically, a 60-day delay in effective date following
publication in the Federal Register would mean these actions would not
begin until the effective date in early January 2027. This would
prevent CMS from reviewing, following up, and granting Initial Delay
Requests, if applicable, in accordance with section 1192(f) of the Act
by the selected drug publication date for initial price applicability
year 2029. Further, a 60-day delay would be inconsistent with our
regulation as codified in Sec. 429.110(f).
If CMS were to begin reviewing Initial Delay Requests 60 days after
the publication of this Final Rule in the Federal Register, CMS would
have a period of less than one month to review such requests, which is
approximately half the minimum time that CMS believes is necessary,
before the February 1 deadline for publication of the selected drug
list (as required by sections 1192(a) and 1191(b)(3) of the Act). As
explained in the preceeding example, such a timeline is insufficient
for CMS to review the Initial Delay Request and request follow ups, if
necessary, allow Biosimilar Manufacturer(s) time to compile and submit
additional information and documents, and for CMS to review such
additional information and documents. Allowing CMS to request
additional information and documents from the Biosimilar Manufacturer,
if applicable (consistent with section 1192(f)(1)(B)(ii)(II) of the
Act), and providing sufficient time for a manufacturer to respond to
such requests, are key parts of the Initial Delay Request process, and
could not be reasonably completed before the statutory deadline if CMS
did not waive the 60-day delay in effective date. Therefore, this delay
would interfere with the timely implementation of this statutorily
authorized program. CMS finds good cause to waive the 60-day delay in
effective date of the final rule, otherwise CMS will not be able to
complete the Initial Delay Request process before the February 1, 2027
deadline for publication of the selected drug list (as required by
sections 1192(a) and 1191(b)(3) of the Act).
E. Severability of Provisions
Finally, CMS is clarifying and emphasizing its intent that if any
provision of this final rule 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 finalizes provisions that are
intended to and will operate independently of each other, even if each
serves the same general purpose or policy goal.
II. Proposed Requirements for the Medicare Drug Price Negotiation
Program and Analysis of and Responses to Public Comments
A. General Provisions
1. Basis and Scope (Sec. 429.10)
In proposed Sec. 429.10, we proposed 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 proposed 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 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
policies related to requests for a biosimilar delay (proposed Sec.
429.110) are distinct and severable from the policies related to the
identification of qualifying single source drugs (proposed Sec.
429.125). As another example, we intend that the 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 policies 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 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 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 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)).
We did not receive public comments on our proposals in this
section.
Final Decision: We are finalizing Sec. 429.10 as proposed.
2. Definitions (Sec. 429.20)
In the proposed rule, we proposed to 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 new definitions based on policies detailed in
this final rule.
a. Additional Delay Request
We proposed 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 proposed 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 proposed 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
[[Page 72181]]
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 proposed 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 solicited 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 proposed 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 proposed 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 proposed 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 proposed 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 proposed to define ``Biologics License Application (BLA)'' as an
application submitted under section 351 of the PHS Act.
j. Biosimilar Biological Product or Biosimilar
We proposed 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. We proposed
to use the term ``biosimilar'' throughout part 429 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 proposed to define ``Biosimilar Delay Request'' as either an
Initial Delay Request or an Additional Delay Request.
l. Biosimilar Manufacturer
We proposed 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 final rule.
m. BLA Holder
We proposed 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 proposed 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 final rule.
o. Combined Part B and Part D Amount
We proposed 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(s).
p. CPI-U
We proposed 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 proposed 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 proposed 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 proposed 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 proposed 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.
[[Page 72182]]
u. Extended-Monopoly Drug
We proposed to define ``extended-monopoly drug'' as having the
meaning set forth in section 1194(c)(4) of the Act.
v. FDA-Approved Indication
We proposed 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 proposed to define ``fixed combination drug'' as having the
meaning set forth in 21 CFR 300.50.
x. Generic Drug
We proposed 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 proposed 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 proposed 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 proposed 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 proposed 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 proposed to define ``initial price applicability year'' as
having the meaning set forth in section 1191(b)(1) of the Act.
ad. Knowingly
We proposed to define ``knowingly'' as having the meaning set forth
in 42 CFR 1003.110.
ae. Long-Monopoly Drug
We proposed to define ``long-monopoly drug'' as having the meaning
set forth in section 1194(c)(5) of the Act.
af. Manufacturer
We proposed to define ``manufacturer'' as having the meaning set
forth in section 1191(c)(1) of the Act.
ag. Manufacturer Discount Program
We proposed 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 proposed 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 proposed 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 proposed 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 proposed 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 proposed 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 final rule) for CMS' proposals for identifying drugs that meet
this statutory definition.
am. Negotiation Period
We proposed to define ``negotiation period'' as having the meaning
set forth in section 1191(b)(4) of the Act.
an. Net Part D Plan Payment and Beneficiary Liability
We proposed 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 proposed to define ``New Drug Application (NDA)'' as an
application submitted under section 505(b) of the FD&C Act.
ap. Off-Label Use
We proposed 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 proposed to define ``orphan drug designation'' as the meaning
set forth in 21 CFR 316.3(b)(11).
ar. Outcomes
We proposed 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 proposed 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.
[[Page 72183]]
at. Partnership
We proposed 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 proposed to define ``personally identifiable information (PII)''
as having the meaning set forth at 2 CFR 200.1.
av. Plasma-Derived Product
We proposed to define ``plasma-derived product'' as having the
meaning set forth in section 1192(e)(3)(C) of the Act.
aw. Preliminary Price
We proposed 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 proposed to define ``price applicability period'' as having the
meaning set forth in section 1191(b)(2) of the Act.
ay. Primary Manufacturer
We proposed 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 proposed to define ``private label distributor'' as having the
meaning set forth in 21 CFR 207.1.
ba. Protected Health Information (PHI)
We proposed to define ``protected health information (PHI)'' as
having the meaning set forth at 45 CFR 160.103.
bb. Qualifying Single Source Drug
We proposed 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 final 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 proposed 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 proposed 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 proposed to define ``Reference Manufacturer'' as the Primary
Manufacturer of the Reference Drug that is named in a Biosimilar Delay
Request.
bf. Reference Product
We proposed to define ``Reference Product'' as having the meaning
set forth in section 1191(c)(4) of the Act.
bg. Relabeler
We proposed to define ``relabeler'' as having the meaning set forth
in 21 CFR 207.1.
bh. Renegotiation-Eligible Drug
We proposed to define ``renegotiation-eligible drug'' as having the
meaning set forth in section 1194(f)(2) of the Act.
bi. Repackager
We proposed to define ``repackager'' as having the meaning given
the term ``repacker'' set forth in 21 CFR 207.1.
bj. Request To Terminate
We proposed 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), 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 proposed 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 proposed 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
Request as set forth in section 1192(f)(2) of the Act.
bm. Section 1194(e)(1) Factors
We proposed 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 proposed to define ``section 1194(e)(2) factors'' as the factors
described in section 1194(e)(2) of the Act.
bo. Selected Drug
We proposed 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 final rule)
for CMS' proposals for identifying drugs that meet this statutory
definition.
bp. Selected Drug Publication Date
We proposed 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 proposed 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 proposed 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 proposed 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.
[[Page 72184]]
bt. Specified Manufacturer
We proposed 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 proposed 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 proposed 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 final 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 proposed 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 proposed 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 proposed 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 proposed 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 final 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 proposed 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 proposed 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 proposed to define ``unit'' as having the meaning set forth in
section 1191(c)(6) of the Act.
cd. Unmet Medical Need
We proposed 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 will 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 proposed to define ``Wholesale Acquisition Cost (WAC) unit
price'' as the manufacturer's list price for the drug or biological
product to wholesalers or 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.
We received public comments on our proposed definitions. The
following is a summary of the comments we received and our responses.
Comment: A commenter suggested that for the definition of ``off-
label use'', CMS clarify that ``authoritative medical literature, and/
or accepted standards of medical practice'' should be relevant to the
Medicare population when it considers off-label use for the purpose of
determining therapeutic alternatives. The commenter stated that
clinical guidelines outside the United States would not be relevant and
including such international guidelines could increase the
administrative burden on the agency.
Response: We appreciate this commenter's suggestion to limit
evidence related to off-label use to the Medicare population, and the
commenter's statement that using clinical guidelines outside the United
States would be irrelevant and increase administrative burden. As
discussed in section II.F.3.d.1. of the proposed rule (91 FR 36292), we
will consider information from studies with different study populations
but intend to prioritize research and real-world evidence relating to
Medicare populations, including individuals with disabilities, patients
with end-stage renal disease, and Medicare-aged populations. Clinical
practice guidelines developed outside the United States will not be
categorically excluded from consideration or deemed irrelevant to the
Medicare population solely on the basis of their country of origin.
Rather, the relevance of any clinical practice guideline will be
assessed, in part, based on the extent to which the guideline and its
recommendations are reasonably applicable to the care delivery setting
in which they are
[[Page 72185]]
intended to be implemented and the Medicare population. We refer the
commenter to Sec. 429.505 for additional information on how we
evaluate evidence.
Comment: A commenter supported the broad definition of ``outcomes''
which includes aspects of a patient's life.
Response: We appreciate the commenter's support.
Comment: A commenter recommended that CMS clarify that research and
development costs, as described under definitions relating to research
and development costs in Appendix A of the Negotiation Program
Guidance, should be applied in the rule. This commenter supported the
exclusion of acquisition costs from consideration of research and
development costs.
Response: We thank this commenter for their suggestion. Because the
term ``Research and Development (R&D) Costs and Recoupment'' is defined
in the information collections for Identification and Selection of
Renegotiation-Eligible Drugs ICR Form (CMS-10844, OMB 0938-1443) and
the Negotiation Data Elements ICR Form (CMS-10849, OMB 0938-1452),
consistent with the general directive established in this final rule
that data submissions must be reported to CMS in the form and manner
specified by CMS, CMS declines to add a definition of ``Research and
Development (R&D) Costs and Recoupment'' to Sec. 429.20.
Comment: A commenter suggested that the definition of ``starting
point'' should state the methodology for developing the starting point,
rather than defining the term by referencing Sec. 429.510.
Response: We appreciate this commenters' input. We believe the
current definition of ``starting point'' appropriately indicates that
the term refers to the numerical dollar amount used by CMS in
developing an initial offer and that such dollar amount is determined
per Sec. 429.510(d) and 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). We do not believe repeating the
process of determining the starting point outlined in Sec. 429.510(d)
is necessary.
Comment: A commenter recommended that CMS broaden the definition of
``unmet medical need'' to include public health needs and health
outcomes important to patients, such as improvement in the safety
profile of a drug, prevention of disease progression, improvement in
quality of life, reduction in time off from work, and improvement in
caregiver outcomes. The commenter also requested that CMS specify and
publicly report the submitted data that CMS considers to be evidence an
unmet medical need; and provide the public and Primary Manufacturers
with detailed evidence on the factors considered in determining if a
product meets or does not meet an unmet medical need and how this
factor impacted the resulting MFP. A commenter suggested that ``unmet
medical need'' be considered at the time of the launch of the product.
Response: Consistent with our response to similar comments in the
Negotiation Program Guidance and the final guidance for initial price
applicability year 2027, we note that the definition of ``unmet medical
need'' is adopted from section 60.3.3.1 of the Negotiation Program
Guidance, which was developed after consideration of public comments
submitted for the revised guidance for initial price applicability year
2026 and with reference to section 1194(e)(2)(D) of the Act and FDA's
``Guidance for Industry Expedited Programs for Serious Conditions--
Drugs and Biologics.'' Many of the considerations commenters raised,
such as patient quality of life, are considered as part of other
factors listed at section 1194(e)(2) of the Act. We will evaluate the
extent to which a selected drug addresses an unmet medical need at the
time of consideration based on all available information at such time
of consideration, which aligns with CMS' approach to identifying
indications for a selected drug, reviewing manufacturer costs and data,
selecting a therapeutic alternative(s), and considering other
negotiation factors.
Comment: A commenter recommended that CMS revise the definition of
``therapeutic advance'' to include representation of significant impact
among a socially or economically vulnerable population, which is not
evident among non-vulnerable populations; or patient-focused
improvements in the symptoms or health outcomes associated with a
disease (for example, reduction of symptoms, delayed progression of
illness, ability to perform daily functions, improvements in adherence,
quality of life); or improvements on a validated clinical outcome
assessment for the disease state.
Response: We appreciate this commenter's suggestions. Consistent
with the Negotiation Program Guidance, we will determine whether a
selected drug represents a therapeutic advance by examining
improvements in outcomes for the selected drug compared to its
therapeutic alternative(s) per the definition in this section of the
final rule. We note that many of the other factors mentioned are
considered during the development of the initial offer as outlined in
Sec. 429.510.
Comment: A commenter stated that CMS' proposed rule did not provide
sufficient context regarding the potential expansion for the definition
of ``authorized representative''. The commenter stated that, absent
other entities, submissions or program contexts CMS has in mind, they
cannot reasonably comment on whether an expanded definition is
necessary or operable. The commenter recommended that CMS not finalize
as proposed and instead identify the specific circumstances CMS intends
the definition to cover in future rulemaking.
Response: We appreciate this commenter's suggestions. After further
consideration of the intended application of the definition of
``Authorized Representative'' across Negotiation Program requirements
and information collections, we believe that the proposed definition of
``Authorized Representative'', which was intended to be a general term,
is more restrictive than intended given that it is limited to only
individuals with the authority or capacity to legally bind a Primary
Manufacturer and could be read as limited to use only in the context of
the signing of a Negotiation Program Agreement. This may create issues
for Biosimilar Manufacturers attempting to certify submissions in
response to the Biosimilar Delay ICR Form (CMS-10844, OMB 0938-1443) or
for Primary Manufacturers attempting to certify submissions such as the
Negotiation Data Elements ICR Form (CMS-10849, OMB 0938-1452).
Accordingly, we are making a clarifying change to the proposed
definition of Authorized Representative by revising the defined term to
``Authorized Representative of the Primary Manufacturer'' and striking
the reference ``to the terms and conditions of the Negotiation Program
Agreement''. Additionally, we have added a definition of ``Authorized
Representative of the Biosimilar Manufacturer'' under Sec. 429.20 to
provide specification on who may sign a Biosimilar Delay Request on
behalf of a Biosimilar Manufacturer.
Comment: A few commenters opposed the definitions of ``Primary
Manufacturer'' and ``Secondary Manufacturer'', stating that such
definitions do not align with statute and may result in a Primary
Manufacturer being held responsible, for example, for violations by or
noncompliance of a Secondary Manufacturer.
[[Page 72186]]
Response: As discussed in CMS' response in Negotiation Program
Guidance and the final guidance for initial price applicability year
2027, given that section 1193(a)(1) of the Act instructs CMS to
negotiate with ``the manufacturer'' to arrive at the MFP for a given
selected drug to which ``the manufacturer'' would provide access in
accordance with the statute, and given that the term ``the
manufacturer'' appears repeatedly throughout the statutory provisions
establishing the Negotiation Program, the best statutory interpretation
is to interpret the term ``manufacturer'' as a single entity for the
negotiation process, responsible for negotiation of a single MFP for a
given selected drug. Thus, in accordance with section 1193(a)(1) of the
Act and other statutory references to ``the manufacturer,'' CMS will
enter into a Negotiation Program Agreement with ``the manufacturer'' of
a selected drug, where ``the manufacturer'' is the NDA/BLA holder. We
adopted the designations and definitions of ``Primary Manufacturer''
and ``Secondary Manufacturer,'' respectively, to establish a process to
negotiate the maximum fair price with ``the manufacturer'' to align
with the meaning of the statutory language and establish
responsibilities and requirements of the Primary Manufacturer related
to data collection and submission and MFP availability for the selected
drug manufactured, marketed, controlled, or sold by the Secondary
Manufacturer(s).
Final Decision: After consideration of public comments received, we
are finalizing Sec. 429.20 with modifications. We are making
clarifying modifications to the term ``Authorized representative''. We
are adding ``of the Primary Manufacturer'' to the term and removing
``to the terms and conditions of the Negotiation Program Agreement''
from the definition. We also are adding a definition for ``Authorized
Representative of a Biosimilar Manufacturer''. The term as finalized in
this rule is defined as ``an individual that has the authority or
capacity to legally bind the Biosimilar Manufacturer and meets one of
the following criteria:
<bullet> Chief Executive Officer of the Biosimilar Manufacturer
<bullet> Chief Financial Officer of the Biosimilar Manufacturer
<bullet> An individual with equivalent authority to a Chief
Executive Officer or Chief Financial Officer of the Biosimilar
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 definition''.
We are making additional non-substantive, technical modifications
to other definitions. To the term, ``Combined Part B and Part D
amount'', we are correcting a typographical error to a citation to
``Sec. 429.430''; to the term, ``FDA-approved indication'', we are
adding ``other'' before ``FDA regulations as applicable''; to the term
``Initial Delay Period,'' we are replacing ``as proposed'' in paragraph
(1) with ``as described'' to reflect that this a final regulation; to
the term ``therapeutic advance'' at section II.A.2.bw. of the proposed
rule, we are adding ``.'' after ``at such time of consideration''; to
the term ``therapeutic alternative'' at proposed Sec. 429.20, we are
removing erroneous text ``For the purpose of developing the initial
offer CMS considers therapeutic advance as of the date specified in
Sec. 429.505(d)(2)'', we are replacing ``unmet medical need'' with
``therapeutic advance'', and we are replacing ``addresses an unmet
medical need'' with ``represents a therapeutic advance; to the term
``self-administered drug'', we are adding ``product'' after
``biological''; and to the definition of ``unmet medical need'', we are
changing ``would'' to ``will''.
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
proposed to codify these limitations on review in proposed Sec.
429.30.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters expressed concern that the limitations on
administrative and judicial review of precluded sections specified in
section 1198 of the Act increase the need for CMS to act with restraint
in finalizing its proposed policies related to those sections.
Specifically, these commenters noted that such limitations increase the
need for establishing objective regulatory standards and for ensuring
methodological consistency with regards to certain policies precluded
from administrative and judicial review.
Response: We appreciate these comments and reiterate that section
1198 of the Act establishes that there shall be no administrative or
judicial review of the determinations described in that section. We
believe the policies set forth and described in this final rule are
consistent with the law and accomplish the aim of establishing
objective regulatory standards and ensuring methodological consistency.
Final Decision: After consideration of public comments, we are
finalizing Sec. 429.30 as proposed.
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 proposed 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 proposed 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
[[Page 72187]]
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 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
proposed 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. As
discussed in detail in section II.G.3. of this final rule, we may also
select a drug or drugs for renegotiation based on criteria proposed in
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 also proposed 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.
[GRAPHIC] [TIFF OMITTED] TR09NO26.042
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 proposed 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 \15\ 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
final rule). We proposed 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 final
[[Page 72188]]
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.
---------------------------------------------------------------------------
\15\ 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 proposed 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,\16\ as applicable, identified as set forth in
proposed Sec. 429.125(b). For a potential qualifying single source
drug identified under proposed Sec. 429.125(b)(4)(i), we proposed to
publish the shared active moiety/active ingredient identified under
proposed 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 proposed 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 proposed 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 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 proposed 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.
---------------------------------------------------------------------------
\16\ 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 proposed 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.
---------------------------------------------------------------------------
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 proposed 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
\17\ 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 proposed 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.
---------------------------------------------------------------------------
\17\ 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>.
---------------------------------------------------------------------------
We proposed 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 final rule), we proposed 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 proposed 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 proposed in Sec.
429.100(e) that a Primary Manufacturer has an ongoing obligation
[[Page 72189]]
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).\18\ 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 proposed 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 drug for a given initial price applicability year 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 proposed
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.
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\18\ 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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We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported CMS' proposal 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, stating that the list will improve public understanding of the
drug selection process and help predict drugs that may be selected in
the future, which would inform activities such as formulary planning
and manufacturer preparations. A commenter supported reducing the
published list of negotiation-eligible drugs to up to 30 negotiation-
eligible drugs as a way to continue supporting transparency in the
selection process while appropriately not overstating the predictive
value of any single year's rankings. Some commenters supported CMS'
efforts to provide transparency but urged CMS to return to the policy
set forth in the Negotiation Program Guidance to publish a list of the
up to 50 top negotiation-eligible drugs. These commenters stated that a
more comprehensive list is critical for manufacturers to understand
CMS' expenditure methodology and anticipate whether and when their
products are likely to be selected, as well as for purchasers,
researchers, and policymakers to better understand how the selection
methodology operates, evaluate trends in Medicare drug spending, and
identify drugs approaching the selection threshold. A commenter stated
that, although the narrower list may offer sufficient transparency into
the current initial price applicability year, visibility into drugs
ranked #31 through #50 remains valuable to manufacturers assessing
potential eligibility in the subsequent initial price applicability
year. This commenter also stated that visibility into drugs ranked #31
through #50 is particularly important given CMS' inclusion of Medicare
Advantage expenditures in the calculation of total expenditures under
Part B: since MA expenditures are not included in CMS' published Part B
spend data, anticipation of potential selection is challenging for
manufacturers without the list of up to 50 top negotiation-eligible
drugs. A commenter urged CMS to publish a list of drugs that were not
considered qualifying single source drugs because they qualified for
the orphan drug exclusion or the plasma-derived product exclusion and
that, absent the exclusion, would have ranked among the 50 top
negotiation-eligible drugs. A commenter recommended that CMS identify
any drug falling within the top 20 drugs in total expenditures on a net
basis but that is not a selected drug because it does not fall within
the top 20 drugs in total expenditures on the gross basis used for
selection.
Response: We thank the commenters for their support and
suggestions. We agree with the commenter who stated that the list of up
to 30 top drugs offers sufficient transparency into the current initial
price applicability year and affirm that the purpose of the list of top
negotiation-eligible drugs was, and is, to promote transparency into
the drug selection process for the initial price applicability year for
which the list of top negotiation-eligible drugs is published. As we
stated in the proposed rule (91 FR 36245 through 36246), 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 drug for a given initial price applicability year are not
static, and such list was not, and is not, intended to predict or
replicate the selected drug list for future initial price applicability
years. We recognize that the Part B Spending Dashboard \19\ does not
include Part B data for beneficiaries enrolled in MA. However, the
absence of MA data from the Dashboard does not, in itself, provide a
sufficient basis for publishing a list of up to 50 drugs with the
highest Part B expenditures. As we have previously stated, such a list
is not intended to predict or otherwise indicate which drugs may
ultimately be selected for negotiation for future initial price
applicability years.
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\19\ See: <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>.
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We therefore disagree with the premise that an expanded list of up
to 50 top negotiation-eligible drugs would provide greater benefit to
interested parties as compared to the list of up to 30 top negotiation-
eligible drugs, since
[[Page 72190]]
neither version of such list can or should be used to help
manufacturers, researchers, or insurers predict drugs that may be
selected in the future. We decline the suggestions to publish
additional information such as the drugs that qualified for the orphan
drug exclusion or plasma-derived product exclusion or information about
drugs ranked using total expenditures on a net basis; such requests
would be operationally infeasible due to the time constraints required
to meet statutory deadlines and the complexity of the preparation that
must be undertaken in advance of the selected drug publication date,
and, in the case of the request for information about total
expenditures on a net basis, irrelevant to the methodology CMS is
statutorily required to use for purposes of drug selection.
Comment: A few commenters recommended that CMS take steps to
increase transparency around the selected drug list. These commenters
provided specific recommendations, including that CMS should publish a
preliminary ``watch list'' prior to the selected drug publication date;
provide advance notice to manufacturers of each drug appearing on the
list of up to 30 top negotiation-eligible drugs; explain the
methodology and data underlying the published rankings; and disclose
material assumptions used to aggregate spending across dosage forms and
strengths.
Response: We appreciate the suggestions. We believe that the
publication of the selected drug list and the list of up to 30 top
negotiation-eligible drugs provides sufficient transparency into the
drug selection process. We believe that publishing a ``watch list'' or
providing manufacturers with advance notice that their drug will be on
the list of up to 30 top negotiation-eligible drugs prior to the
selected drug publication date is operationally infeasible due to the
time constraints required to meet statutory deadlines and the
complexity of the preparation that must be undertaken in advance of the
publication of the selected drug list by the selected drug publication
date. We therefore decline to adopt these recommendations. In response
to the recommendations that CMS explain the methodology and data
underlying the published rankings and disclose material assumptions
used to aggregate spending across dosage forms and strengths, we direct
readers to Sec. Sec. 429.120 and 429.125, respectively, which provide
details on these processes.
Comment: A commenter supported CMS' proposal in Sec. 429.100(e) to
require Primary Manufacturers to notify CMS at least 30 calendar days
prior to introducing new NDC-11s, stating that this requirement is
essential for program oversight.
Response: We agree and thank this commenter for their support.
Final Decision: After consideration of public comments, we are
finalizing Sec. 429.100 as proposed.
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 proposed 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
proposed 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 final
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 final 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
proposed 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
final rule.
Finally, we proposed 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 the proposed rule, we proposed to modify this
methodology. We proposed 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
[[Page 72191]]
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).
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A couple of commenters supported CMS' proposal to evaluate
total expenditures to the cent, rather than to the dollar as under
prior policy, when determining 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). These commenters stated that the proposal
is a practical regulatory improvement that improves accuracy in drug
selection.
Response: We thank these commenters for their support.
Comment: A commenter stated that as the Negotiation Program expands
and drug selection decisions impact an increasing number of supply
chain entities, interested parties will require greater certainty
regarding how CMS identifies and ranks negotiation-eligible drugs. This
commenter recommended that CMS clearly define all datasets, variables,
calculations, decision rules, and criteria used to determine
eligibility, ranking, and selection, including how CMS will identify
and evaluate drugs with the same total expenditures to the cent, but
the commenter did not specify which aspects of these processes require
further details in their view. This commenter also recommended that CMS
evaluate the potential market effects of ranking negotiation-eligible
drugs with the same total expenditures based on which drug has the
earliest-approved FDA application, asserting that this methodology
could inadvertently disadvantage products that have experienced follow-
on competition from generics or biosimilars.
Response: We appreciate this commenter's input. We believe this
final rule provides robust details regarding how we identify qualifying
single source drugs (Sec. 429.125), calculate total expenditures
(Sec. 429.120), rank and identify negotiation-eligible drugs (Sec.
429.115), and identify selected drugs (Sec. 429.105). For example,
Sec. 429.120(a) sets forth that we will use gross covered prescription
drug costs for PDE records that meet the criteria described in Sec.
429.120(a)(1) through (a)(5) to calculate total expenditures under Part
D; likewise, Sec. 429.120(b) sets forth that we will use total allowed
charges on OM Part B claims that meet the criteria in Sec.
429.120(b)(1)(i) through (b)(1)(vi), in addition to total allowed
charges that would have been applicable under OM Part B for each MA
encounter data record for Part B services that meet the criteria
described in Sec. 429.120(b)(2)(i) through (b)(2)(ix). To provide
another example, Sec. 429.125(b) describes the public sources--which
include, but are not limited to RxNorm, OpenFDA, FDALabel, DailyMed,
and FDA's Active Ingredient-Active Moiety Relationship/Basis of
Strength file--that we use to identify the active moiety/active
ingredient in a potential qualifying single source drug.
While we appreciate the recommendation to evaluate the potential
market effects of ranking negotiation-eligible drugs with the same
total expenditures to the cent based on which drug has the earliest-
approved FDA application, we disagree with the premise that this
methodology could disadvantage products with generic or biosimilar
competition because a potential qualifying single source drug would not
be a qualifying single source drug that could become a negotiation-
eligible drug or selected drug if CMS determines that a generic drug is
approved or a biosimilar is licensed for the potential qualifying
single source drug, and such generic drug or biosimilar is subject to
Bona Fide Marketing.
Final Decision: After consideration of public comments, we are
finalizing Sec. 429.105 as proposed.
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 at
proposed a Sec. 429.105 and section II.B.2. of this final 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 (``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 final 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 \20\ and the Medicare
Part D
[[Page 72192]]
Drug Spending Dashboard,\21\ which may allow them to determine the
likelihood that a given drug may be a selected drug.
---------------------------------------------------------------------------
\20\ 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.
\21\ 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 final rule,
we also proposed 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 the 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 included 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) and (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 proposed 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
proposed 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 selected drug 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 final rule, and in proposed Sec. 429.110(i)
of the proposed rule 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 be 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.
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
[[Page 72193]]
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
proposed 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 proposed Sec.
429.110(c)(1)(i) require that the Reference Drug would be an extended-
monopoly drug, as defined in section 1194(c)(4) of the Act and proposed
Sec. 429.20, 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)(1)(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.
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 1192(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 proposed 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 approved by
FDA.
<bullet> CMS has identified clear and convincing evidence that the
Biosimilar will be marketed before the High Likelihood Deadline.
We proposed 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
[[Page 72194]]
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 proposed 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 United States 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 proposed 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
proposed 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 manufacturing schedule that is
consistent with the public-facing statements and demonstrates readiness
to meet revenue expectations. We proposed 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
proposed 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
[[Page 72195]]
pertaining to the marketing of the Biosimilar (for example, in filings
with the Securities and Exchange Commission (SEC) 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 proposed at Sec.
429.110(g)(1)(i)(B) to notify each Reference Manufacturer named in a
successful Biosimilar Delay Request. We proposed 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 final 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 marketed during the Initial Delay Period. CMS proposed 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 proposed 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 proposed 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) of the Act
include requirements for an Additional Delay Request. We proposed these
requirements in
[[Page 72196]]
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 proposed
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 proposed 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 proposed 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)).
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) and (i))
As discussed previously, CMS proposed 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 proposed 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 proposed 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 section II.B.6.d. of this final
[[Page 72197]]
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 proposed 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 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.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A couple of commenters suggested that CMS expand the
Initial Delay Request submission window beyond 30 days so that
Biosimilar Manufacturers have sufficient time to respond. A commenter
recommended that CMS publish the opening and
[[Page 72198]]
closing dates of the submission window not less than 90 days before the
window opens so that sponsors can sequence regulatory submissions
around it. A commenter requested that CMS provide advance notice of a
Reference Drug's potential or actual selection so that Biosimilar
Manufacturers have reasonable advance notice to prepare a request for
delay. A commenter requested CMS publish the number of Initial Delay
Requests and Additional Delay Requests received and the number of
requests granted, as well as a list of all Reference Drugs for the
requests that were submitted.
Response: We thank the commenters for their suggestions. Consistent
with our response to similar comments in the final guidance for initial
price applicability year 2027 and the Negotiation Program Guidance,
this final rule describes the timing for the submission of a request
for a biosimilar delay in accordance with section 1192(f) of the Act
(the ``Biosimilar Delay'') and is based on a set timeline in the
statute and operational constraints related to the drug selection
process. CMS must make a full determination and may not immediately
delay the selection of a Reference Drug whilst making a complete
determination of the requirements specified in section 1192(f) of the
Act to determine the outcome of a request to delay the inclusion of a
Reference Drug by one initial price applicability year (an ``Initial
Delay Request''). Further, the deadline for an Initial Delay Request
will be set as close to the selected drug publication date as is
administratively feasible. We adopted this timeline under the authority
granted in section 1192(f)(1)(B)(ii) of the Act to set the time, form,
and manner of Biosimilar Delay requests, and have exercised this
authority to establish a timeline (which is described in section
II.B.3. of this final rule) that allows CMS to carefully review the
Initial Delay Request documentation and, if applicable, to request
follow-up information from the manufacturer of a biosimilar (the
``Biosimilar Manufacturer'') on its Initial Delay Request. The timeline
ensures that we will have adequate time to review follow-up data and
make a well-informed determination. These timing and operational
constraints do not allow for any additional notice or to extend the
submission period beyond 30 days.
In response to commenters' requests to publish data used to make
determinations regarding the Reference Drug and to publish the list of
all Reference Drugs for submitted Initial Delay Requests, we reiterate
the response provided to similar comments in the Negotiation Program
Guidance and the revised guidance for initial price applicability year
2026. Specifically, the submission of an Initial Delay Request does not
guarantee that a Reference Drug would be a selected drug absent the
Initial Delay Request, nor does it guarantee that the Initial Delay
Request will be granted even if the Reference Drug would be a selected
drug absent the Biosimilar Delay. CMS, therefore, will not publish a
list of Biosimilar Manufacturers submitting an Initial Delay Request or
CMS' determinations. However, as described in section II.B.3. of this
final rule, we will notify each Biosimilar Manufacturer that submits an
Initial Delay Request of CMS' determination regarding such request on
or after the selected drug publication date for the initial price
applicability year as described in Sec. 429.110(g)(1)(i)(A). We will
also notify each Reference Manufacturer named in a successful Initial
Delay Request, as described in Sec. 429.110(g)(1)(i)(B). Further, as
described in Sec. 429.110(g)(2), 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 set forth in Sec. 429.100.
Comment: A couple of commenters asked CMS to allow submissions of
requests as close as reasonably possible to the selected drug
publication date for the initial price applicability year to ensure
that decisions are informed by the most recent developments. A
commenter requested that CMS maintain the end of December submission
due date for the Initial Delay Request. A few commenters suggested that
CMS accept supplemental late-breaking information that may impact CMS'
determination. A commenter suggested CMS permit Biosimilar
Manufacturers to submit amendments to address potential errors or
omissions during CMS' consideration process. A couple of commenters
requested that CMS create a dispute resolution or appeal process for
CMS' determination that a Biosimilar does not qualify for the
Biosimilar Delay.
Response: We thank commenters for this feedback. Consistent with
our response to the comments immediately prior, and our response to
similar comments in the Negotiation Program Guidance, the timing for
submission of a request for a biosimilar delay is based upon the
statute and operational constraints related to the drug selection
process. We decline at this time to create a dispute resolution process
for the Biosimilar Delay. The statutory deadlines for the Negotiation
Program do not provide enough time to establish a dispute resolution
process before the selected drug publication date. Additionally, we
believe that the submission period allows manufacturers to provide the
relevant data to support their application for the Biosimilar Delay
and, following the close of the submission period, for CMS to request
additional information or to address an error or omission as
applicable, and we decline to use a dispute resolution process for a
manufacturer to supplement a submission.
Comment: A commenter suggested CMS provide notice to the Reference
Manufacturer of an Initial Delay Request or an Additional Delay
Request, before a determination of whether the Initial Delay Request or
Additional Delay Request will be granted. A couple of commenters
suggested that CMS provide notice to Reference Manufacturers of
unsuccessful Initial Delay Request or Additional Delay Request
submissions. In the event that an Initial Delay Request or Additional
Delay Request is not granted, a couple of commenters recommended that
CMS provide the Biosimilar Manufacturer that requested the Initial
Delay Request or Additional Delay Request rationale for why the Initial
Delay Request or an Additional Delay Request was not granted.
Response: We thank this commenter for their input. Information
regarding the timing for CMS to notify each Reference Manufacturer
named in a successful Biosimilar Delay Request is discussed in section
II.B.3.b. of the proposed rule (91 FR 36250) and in Sec.
429.110(g)(1)(i)(B). Additionally, on this same page of the proposed
rule, CMS stated we would not notify Reference Manufacturers named in
unsuccessful Initial Delay Requests as an unsuccessful Initial Delay
Request does not impact selection. Accordingly, notifying the Reference
Manufacturer of an unsuccessful Initial Delay Request would generate
more administrative burden for CMS and as such, we decline to adopt
this suggestion in the final rule. As finalized at Sec. 429.110(g)(1),
we will provide a written notice to the Biosimilar Manufacturer
regarding whether the request was successful or unsuccessful. If
unsuccessful, we will specify the reason for the unsuccessful request.
Comment: A commenter requested that CMS clarify the date by which a
Biologics License Application filed under section 351(k) of the PHS Act
(hereinafter referred to as 351(k) application) must be accepted for
review by the FDA to qualify for a
[[Page 72199]]
Biosimilar Delay, and suggested that CMS permit a Biosimilar
Manufacturer to update its Initial Delay Request with changes to the
351(k) BLA filing status on any date on or before the January 31st
prior to the selected drug publication date for the initial price
applicability year for which the Biosimilar Manufacturer requests a
Biosimilar Delay. A commenter requested that CMS permit Biosimilar
Manufacturers who have not yet filed 351(k) applications to submit
Initial Delay Requests. A commenter supported CMS' proposal to identify
a date by which the Biosimilar Manufacturer's BLA must be accepted for
review by the FDA to be considered for the Initial Delay Requests. A
few commenters requested that CMS permit Biosimilar Manufacturers who
have filed 351(k) applications but have not yet had the application
accepted by the FDA for review, to submit Initial Delay Requests,
subject to acceptance of the application. A commenter recommended that
Biosimilar Manufacturers be able to submit information accompanying the
Initial Delay Request that indicates it is likely that the 351(k)
application will be approved by the publication of the selected drug
list for the applicable initial price applicability year. A commenter
recommended that CMS permit Biosimilar Manufacturers to submit
information as part of the Initial Delay Request demonstrating that the
FDA is likely to approve the 351(k) application. A few commenters
argued that CMS' proposed approach to determining the high likelihood
standard is closer to requiring certainty of launch than high
likelihood of launch within the biosimilar delay window, which is not
aligned with statute. A commenter stated that CMS' proposal to
determine whether there is a high likelihood that a Biosimilar will be
licensed and marketed within the statutory timeframe by January of the
calendar year of the selected drug publication date for the initial
price applicability year for which the Reference Drug would be selected
absent the Initial Delay Request is not the best reading of the statute
but did not provide an alternative interpretation for consideration.
Response: We thank commenters for their feedback. Consistent with
our response to similar comments in the final guidance for initial
price applicability year 2027 and the revised guidance for initial
price applicability year 2026, we believe that section II.B.3. of the
proposed rule aligns with the statutory language and do not find reason
to allow for additional circumstances that would meet the licensure
component of high likelihood determination. As stated in section
1192(f)(3)(A) of the Act, the Secretary must find that the BLA has been
accepted for review or approved by the FDA. We also state that in
section II.B.3. of the proposed rule that the Biosimilar Manufacturer
must be operationally ready, and that the finding is made reasonably in
advance of the selected drug publication date to allow CMS to finalize
the selected drug list. As such, commenters' suggestions are either
inconsistent with the statute requiring the BLA to have been accepted
for review or approved by the FDA, or infeasible due to the timing
required to release the selected drug list.
As stated in Sec. 429.110(d)(1), we 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
CMS to review the information and finalize the selected drug list for
the initial price applicability year. As discussed in the Negotiation
Program proposed rule (91 FR 36249), this would enable CMS to use the
most recent possible data to make a determination on the Initial Delay
Request and before publication of the selected drug list for the
initial price applicability year. Accordingly, we decline to specify a
date by which a 351(k) application must be accepted by the FDA to
qualify for a Delay in this forum.
As discussed in the Negotiation Program proposed rule (91 FR
36248), we believe that the best interpretation of section
1192(f)(1)(A) of the Act requires that the 351(k) application has been
approved or accepted for review by the FDA by January 15 of the
selection year. Additionally, as discussed in the Negotiation Program
proposed rule (91 FR 36250), in accordance with section 1192(f)(3)(B)
of the Act, we must use information from items described in sections
1192(f)(1)(B)(ii)(I)(bb) and (III) of the Act submitted to us 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. We believe the
requirements detailed in that section are the best read of the statute
for ascertaining that there is clear and convincing evidence that the
Biosimilar will be marketed before the High Likelihood Deadline. The
statute requires clear and convincing evidence, and contrary to
commenters' arguments, the requirements detailed in the section are
intended to comply with this evidentiary standard. Commenters'
alternative proposals did not satisfy this evidentiary standard, and as
such, we decline to modify our proposed approach at this time.
Comment: A few commenters stated that CMS should request all
information under its authority in section 1192(f)(1)(B)(ii)(II) of the
Act that a Biosimilar Manufacturer deems relevant to determination of a
high likelihood of marketing and offered suggestions on the types of
supportive evidence that CMS should consider when evaluating whether a
Biosimilar Manufacturer is likely to meet the High Likelihood Deadline.
A couple of commenters stated that much of the information relevant to
marketing of a Biosimilar is commercially sensitive and therefore may
not be reflected in the types of information set forth in Sec.
429.110(f)(1) and therefore requested that CMS permit Biosimilar
Manufacturers to submit confidential business information as part of
the Initial Delay Request process. A commenter requested that CMS
establish protection for treatment of confidential commercial or
financial information in the regulatory text, as well as the preamble.
Response: We thank commenters for their feedback. In response to
commenters' suggestions to use any evidence as acceptable evidence
under section 1192(f)(1)(B)(ii)(II) of the Act, we note that this
provision applies only after we have first reviewed the information
submitted in accordance with sections 1192(f)(1)(B)(ii)(I)(bb) and
(III) of the Act and determine that additional information is needed
from the Biosimilar Manufacturer. As discussed in the Negotiation
Program proposed rule (91 FR 36247), we note that we will protect from
disclosure information submitted in a Biosimilar Delay Request that is
a trade secret or confidential commercial or financial information 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)). We decline at this time to amend the regulatory text regarding
confidential information.
Comment: A few commenters recommended that CMS strike references to
a precise launch date, stating that identifying a clearly specified
launch date is not always possible, and that CMS should instead rely on
other public facing statements from manufacturers indicating that they
will be able to launch within the 2-year window. A commenter suggested
that a Biosimilar Manufacturer should be
[[Page 72200]]
determined to have high likelihood of marketing the Biosimilar if
either option is indicated: lack of agreements with the FTC or the
Department of Justice (DOJ) prohibiting marketing of the drug; or
public facing investor disclosures or manufacturing schedules
indicating that marketing is set to commence within the 2-year
timeframe. A couple of commenters recommended that CMS accept a
``Notice of First Commercial Marketing'', provided to the Reference
Manufacturer by the Biosimilar Manufacturer at least 180 days prior to
marketing of the Biosimilar, as documentation of meeting the high
likelihood standard. A few commenters recommended CMS consider relevant
court orders and litigation developments; litigation status and legal
status; evidence of manufacturing and commercial readiness; public
statements indicating readiness to launch to investors or the SEC
accompanied by attestations from executives of the Biosimilar
Manufacturer; other information submitted by interested parties. A
commenter stated that the circumstances indicating high likelihood that
CMS proposed should not represent the exclusive circumstances under
which a high likelihood determination could be made. A couple of
commenters supported CMS' proposal to consider disclosure about capital
investment, revenue expectations, and actions consistent with the
normal course of business and manufacturing schedules as part of
Initial Delay Request evaluation.
Response: We thank commenters for their feedback. We appreciate
commenters' concerns regarding the current items a Biosimilar
Manufacturer can use to demonstrate clear and convincing evidence that
that Biosimilar will be marketed before the High Likelihood Deadline.
As stated previously in the Negotiation Program Guidance, CMS remains
bound by the statutory constraints that the Biosimilar Manufacturer
must provide ``clear and convincing evidence,'' to be found in the
documentation specific in sections 1192(f)(1)(B)(ii)(I)(bb) and (III)
of the Act.\22\ As discussed previously, we recognize that
representatives of a manufacturer have fiduciary obligations as company
representatives and legal disclosure requirements under the Securities
Act of 1934 for a public traded company. We again decline to specify
that statements of a fiduciary alone that the Biosimilar will be
marketed and/or that there are no patent barriers demonstrate ``clear
and convincing'' evidence that there is a high likelihood the
Biosimilar will be marketed by the High Likelihood Deadline. We do not
believe that this information alone is ``clear and convincing.''
Additionally, we disagree with commenters' suggestions that the statute
permits CMS to consider an attestation as evidence separate from the
specified documentation in the statute. We also disagree with the
alternatives suggested by commenters for demonstrating clear and
convincing evidence that the Biosimilar will be marketed by the High
Likelihood Deadline because they do not account for the often complex
and serial nature of patent litigation between reference product and
biosimilar manufacturers prior to market entry of a biosimilar and/or
whether there are patents related to the Reference Drug that could
prevent the Biosimilar from being marketed before the High Likelihood
Deadline.
---------------------------------------------------------------------------
\22\ Which includes: all agreements related to the Biosimilar
filed with the Federal Trade Commission 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; 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 the Biosimilar
Manufacturer's disclosures pertaining to the marketing of the
Biosimilar (for example, in filings with the SEC 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 biological product.
---------------------------------------------------------------------------
As stated previously in the Negotiation Program Guidance, we
identified examples of the type of information we may consider to be
``clear and convincing evidence'' in the documentation submitted by the
Biosimilar Manufacturer including the documentation specified in
sections 1192(f)(1)(B)(ii)(I)(bb) and (III) of the Act to evaluate if
the Biosimilar has a high likelihood of being marketed by the High
Likelihood Deadline. As described at Sec. 429.110(d)(2), 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.
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 proposed 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 USPTO's 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.
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 manufacturing schedule that is
consistent with the public-facing
[[Page 72201]]
statements and demonstrates readiness to meet revenue expectations. As
discussed in the proposed rule (91 FR 36250), we proposed these
criteria because we believe they are indicative of operational
readiness and should be available in the elements that we must consider
in making this determination as required by section 1192(f)(1)(B)(ii)
of the Act. These examples are illustrative but alone may not always
constitute ``clear and convincing evidence'' of a high likelihood of
marketing.
Comment: A few commenters recommended that CMS consider the
totality of circumstances when considering whether to grant an Initial
Delay Request. A commenter recommended that CMS consider the following
additional criteria when evaluating the high likelihood standard: the
Biosimilar Manufacturer has not stated that it will not market the
product prior to the end of the relevant period; the Biosimilar
Manufacturer has not withdrawn its BLA; the Biosimilar Manufacturer is
not in arrears for fees under section 744H of the FD&C Act; no
manufacturing facility has ``official action indicated'' as a status;
there are no clinical trial protocol amendments that would delay
enrollment completion and marketing beyond the pause period. A
commenter recommended that CMS consult with FDA on whether a Biosimilar
is likely to meet the high likelihood threshold. A commenter requested
additional transparency on how CMS evaluates the high likelihood
standard.
Response: We thank commenters for their feedback. As previously
stated in this section, we remain bound by the statutory constraints
that the Biosimilar Manufacturer must provide ``clear and convincing
evidence,'' to be found in the documentation specific in sections
1192(f)(1)(B)(ii)(I)(bb) and (III) of the Act. The information
suggested by commenters does not provide clear and convincing evidence
that the patents relevant to the Reference Drug are unlikely to prevent
the Biosimilar from being marketed before the High Likelihood Deadline,
or that the Biosimilar Manufacturer will be operationally ready to
market the Biosimilar before the High Likelihood Deadline. As discussed
previously, we will consider the totality of the circumstances in
making a determination of whether there is a high likelihood that a
Biosimilar will be licensed and marketed by the High Likelihood
Deadline given the information and acceptable documentation provided as
part of the Initial Delay Request. Additionally, we will not take the
absence of negative information as suggested by commenters within the
specified acceptable documentation as clear and convincing evidence of
high likelihood that a Biosimilar will be licensed and marketed before
the High Likelihood Deadline. We direct readers to the Negotiation
Program proposed rule (91 FR 36249 and 36250) for more information on
how CMS determines whether there is a high likelihood that a Biosimilar
will be licensed and marketed before the High Likelihood Deadline as
discussed in section 1192(f)(3)(B) of the Act. In the Negotiation
Program proposed rule (91 FR 36250), we discussed examples of the
circumstances under which the Biosimilar Manufacturer will be
operationally ready to market the Biosimilar before the High Likelihood
Deadline, though clarified that the examples are not exhaustive of the
information that might be included in the documentation required at
section 1192(f)(3)(B) of the Act in a submission for a request for an
Initial Delay Request necessary to determine ``clear and convincing
evidence'' that the Biosimilar will be marketed before the High
Likelihood Deadline. Finally, we believe we will have sufficient
information submitted by the Biosimilar Manufacturer as part of the
Initial Delay Request or Additional Delay Request to determine that
there is clear and convincing evidence that the Biosimilar will be
marketed before the High Likelihood Deadline and declines at this time
to implement a structural consultation with FDA regarding High
Likelihood.
Comment: A few commenters requested that CMS remove or clarify the
proposed requirement that Biosimilar Manufacturers not have pending
litigation regarding patent infringement. A commenter recommended that
CMS revise the standard to ``neither a court or PTAB has ruled that the
Biosimilar Manufacturer has infringed on a patent'' and clarify that
resolution of patent litigation be taken as clear and convincing
evidence of that the Biosimilar will be marketed before the High
Likelihood Deadline. A commenter supported the proposal to disqualify
Initial Delay Request applications that indicate an agreement between
the Reference Manufacturer and the Biosimilar Manufacturer exists to
require the Biosimilar Manufacturer to submit a Biosimilar Delay
Request, delay market entry, or restrict quantity sold. The commenter
requested that CMS clarify what types of agreements between the
biosimilar manufacturer and reference manufacturer are disqualifying
and recommended clarifying that quantity limits and improper
constraints restrict output, timing, or ability to compete, such as
volume caps, deferring entry, or encourage substitution for an
authorized biosimilar are disqualifying. The commenter requested that
CMS clarify that settlements between the Biosimilar Manufacturer and
the Reference Manufacturer not be automatically disqualifying, just
because litigation is involved.
Response: We thank commenters for these suggestions. We refer
readers to the Negotiation Program proposed rule (91 FR 36249) and
proposed Sec. 429.110(d)(2). We state 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 before the High Likelihood Deadline; and (2) that
the Biosimilar Manufacturer will be operationally ready to market the
Biosimilar before the High Likelihood Deadline. These requirements
address the two primary contributing factors to delays in marketing of
biosimilars approved in the United States 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 before the High Likelihood Deadline. In
response to the commenter requesting that resolution of patent
litigation be taken as sufficient clear and convincing evidence that
the Biosimilar will be marketed before the High Likelihood Deadline, we
note that other barriers may be present that could prevent the
Biosimilar Manufacturer from being operationally ready by the High
Likelihood deadline. Accordingly, we decline at this time to remove the
requirement that Biosimilar Manufacturers not have pending litigation
regarding patent infringement and decline at this time to revise the
standard by which High Likelihood is determined.
Consistent with our response to similar comments in the Negotiation
Program Guidance, the final guidance for initial price applicability
year 2027, and the revised guidance for initial price applicability
year 2026, we reiterate that section 1192(f)(2)(D)(iv) of the Act
excludes certain Biosimilar Manufacturers from the Biosimilar Delay if
CMS determines that the Biosimilar Manufacturer is the same as the
Reference Manufacturer or that the Biosimilar Manufacturer has entered
into any agreement with the Reference
[[Page 72202]]
Manufacturer that requires or incentivizes the Biosimilar Manufacturer
to submit a Biosimilar Delay, or that restricts the quantity (either
directly or indirectly) of the Biosimilar that may be sold in the
United States over a specified period of time. We confirm that the
existence of an agreement alone between a Biosimilar Manufacturer and a
Reference Manufacturer does not disqualify the Biosimilar from being
eligible for a delay. CMS will consider all information available at
the time of the Biosimilar Manufacturer discloses the existence of an
agreement between the Biosimilar Manufacturer and Reference
Manufacturer to determine whether the agreement requires or
incentivizes the Biosimilar Manufacturer to submit a Biosimilar Delay
Request or restricts the quantity (either directly or indirectly) of
the Biosimilar that may be sold in the United States over a specified
time consistent with the statute. At this time, we decline to provide
specific details on what types of agreements would be considered
disqualifying and refers readers to the characteristics of such
agreements as described in section 1192(f)(2)(D)(iv) of the Act. We
decline to provide specific details at this time to avoid inadvertently
providing an inflexible or exhaustive list of agreements that could
unintentionally leave out certain agreements that, as required by
statute, would require denying the Biosimilar Delay Request.
Comment: A few commenters opposed the October deadline by which CMS
proposes to require Biosimilar Manufacturers to demonstrate licensing
and marketing during the Initial Delay Period or Second Delay Period,
and recommended CMS evaluate at the end of the year instead. A couple
of commenters recommended that CMS provide an initial determination of
whether licensing and marketing have occurred in October, accompanied
by a public notice, before making a final determination at the end of
the year. A commenter suggested requiring ongoing updates from the
Biosimilar Manufacturer regarding launch dates. A couple of commenters
requested that CMS provide additional transparency on how a Biosimilar
Manufacturer can demonstrate that it has made a significant amount of
progress toward both licensure and marketing of the Biosimilar since
the submission of the Initial Delay Request and provide additional
clarity on timing of when a determination of licensure and marketing
would be made.
Response: We appreciate these comments. In the Negotiation Program
proposed rule
[…truncated; see source link]Indexed from Federal Register on November 9, 2026.
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