Content Management System Release IRA Price Negotiation Guide last week. Here are some points on how to choose your medication.
Which drugs are eligible for negotiation?
- For small molecules, the drug must (i) be FDA-approved, (ii) have been FDA-approved at least 7 years ago, and (iii) have no generics on the market.
- For biomolecules, the drug must (i) be FDA-approved, (ii) have been FDA-approved at least 11 years ago, and (iii) have no biosimilars on the market.
Combination medications always prescribed together will be considered a single treatment.
The top 15 drugs by Part D spending between November 1, 2023, and October 31, 2024 will be considered eligible for negotiation.
How does a drug qualify for Orphan Drug Exclusion?
The drug must only be indicated for 1 rare disease. CMS states, “A drug that has orphan drug designation for more than one rare disease or condition will not be eligible for orphan drug exclusion, even if the drug has not been approved for any indication in other rare diseases or conditions.)”
How do drugs qualify for the low-spend exception?
Drugs with annual Medicare spending totaling less than $200 million will not be considered for price negotiations. $200 includes Part B and Part D expenses for the period November 1, 2023, through October 31, 2024. Total allowable costs (i.e., Medicare, beneficiary, and other third-party payments) will be used to calculate whether a drug meets this threshold. If a Part B drug is bundled with other drugs in an HCPCS code, CMS will use average sales price (ASP) information.
Are plasma-derived products excluded from price negotiations?
Yes.
How do companies respond to the small biotech exception?
CMS uses two basic rules:
- Non-material share of part D costs. CMS requires Part D spending for drugs to be <1% of total CMS Part D spending. The rationale is that if a small biotech's drugs account for more than 1% of Part D expenses, it may no longer be a small biotech.
- Drug sales account for majority of sales for small biotech companies. CMS requires that at least 80% of a company's Part D expenditures be for the drug under consideration. CMS's logic is likely that if a company sells a lot of drugs, it's probably not a small biotech company. However, if a small biotech has a lead drug and a drug that is new to the market, they don't want to penalize the small biotech for bringing another drug to market. However, it is clear that this regulation will reduce the incentive for companies to bring a second (or third) drug to the market, and when the second and third drugs become available, one may see small biotech companies creating branches. Break up the company.
How does CMS determine whether a biosimilar drug is likely to enter the market?
CMS requires biosimilar manufacturers to submit deferment requests. A biosimilar manufacturer must (i) be the holder of a BLA for the biosimilar, or (ii) if the biosimilar has not yet been licensed, the company must be the sponsor of a BLA submitted for FDA review. However, CMS will not consider biosimilar delays if the biosimilar company received the BLA more than a year ago but has not yet begun marketing the product. Additionally, the biosimilar manufacturer cannot be the same manufacturer as the reference biologic. To ensure that biosimilars have a high likelihood of entering the market, CMS requires that (i) there are no pending patents, and (ii) biosimilar companies provide “disclosures regarding capital investments, revenue expectations, and actions consistent with the ordinary course of business.” “For the marketing of biosimilar biological products,” (iii) has entered into an agreement with the FTC to market the product, and (iv) has submitted a production plan to the FDA.
