Image credits - Bloomberg Law
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As the Biden administration moves forward with its Medicare Drug Price Negotiation Program, significant challenges loom for drugmakers and pharmacies in implementing the new pricing structure. The program, introduced under the Inflation Reduction Act, aims to lower prescription drug costs by negotiating “maximum fair prices” for ten high-cost medications. These negotiated prices, which will take effect on January 1, 2026, are anticipated to reshape the pharmaceutical supply chain.
The Centers for Medicare & Medicaid Services (CMS) has been working to finalize guidance on the new pricing model, but drugmakers and pharmacies are already expressing concerns. The new rules require that negotiated prices be passed directly to patients, potentially complicating existing procurement and reimbursement practices.
Traditionally, pharmacies purchase drugs from wholesalers at a marked-up price and then dispense them to patients. However, under the new system, pharmacies may need to sell drugs at the lower negotiated price, while manufacturers will be responsible for reimbursing the difference if pharmacies have already paid more.
Joey Mattingly, an associate professor at the University of Utah College of Pharmacy, noted that while stakeholders are working proactively to address these challenges, the transition is far from straightforward. The National Community Pharmacists Association (NCPA) has expressed concerns about pharmacies potentially having to “prefund” the new system and wait for reimbursements, which could disrupt their operations.
Pharmacy benefit managers (PBMs), who act as intermediaries between drugmakers, insurers, and pharmacies, are also under scrutiny. Their role in ensuring that negotiated prices benefit patients without increasing out-of-pocket costs remains a contentious issue. Drugmakers and pharmacies alike are calling for greater transparency and clarity from CMS to ensure the successful implementation of this landmark program.