The Centers for Medicare & Medicaid Services (CMS) on Oct. 2 finalized guidance for how manufacturers and providers of Medicare covered drugs may realize the maximum fair price (MFP) for drugs with prices negotiated under the Inflation Reduction Act (IRA).
Negotiated prices for the first round of 10 drugs selected will take effect in 2026, and manufacturers will be required to submit plans for implementing the MFP to CMS by Sept. 1, 2025. CMS’ guidance also describes how the agency will select and negotiate the next slate of 15 drugs, for which negotiated rates will apply in 2027.
Cash Flow Concerns
The guidance is finalized from draft guidance published in May. America’s Essential Hospitals joined other stakeholders in a public comment expressing concerns about interactions between the IRA and the 340B Drug Pricing Program. CMS did not accept the association’s suggestion to abandon the use of 340B claims modifiers, but the agency did acknowledge the potential for these new policies to create cash flow challenges for hospitals.
Under the finalized guidance, the manufacturer must ensure the MFP is realized within 14 calendar days from when the manufacturer is notified the drug has been dispensed to a qualifying patient. Manufacturers also are permitted to sell products with a prospective, up-front discount.
CMS notes that this new process could create cash flow challenges for some entities and plans to issue subsequent guidance for dispensing entities indicating anticipated cash flow concerns from this new policy. Manufacturers must include in their MFP implementation plan their process for mitigating cash flow concerns identified by dispensing entities.
For 340B covered entities, the finalized guidance reiterates manufacturers’ obligation to provide negotiated products at the lesser of the 340B ceiling price and the MFP negotiated under the IRA. CMS notes it is not assuming responsibility for preventing duplication of discounts. The association is looking further into this new policy’s potential implications on 340B and plans to provide additional analyses to members in the coming weeks.
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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