U.S. issues initial Medicare drug price negotiation guidance

WASHINGTON (Reuters) -The U.S. government will select the Medicare program's 10 costliest prescription medicines based on gross spending for negotiating price cuts that will go into effect in 2026, the U.S. Centers for Medicare and Medicaid Services (CMS) said on Wednesday

CMS will only accept one formal written counteroffer during the negotiation process, but will allow up to three additional in-person or virtual negotiation meetings, the agency said in initial guidance issued on Wednesday for its Medicare drug price negotiation program.

The drug price negotiation program was established under the Inflation Reduction Act, which President Joe Biden signed into law last year. It will for the first time allow Medicare, the government health insurance program for millions of Americans age 65 and older, to negotiate prices on prescription drugs, beginning with the ones on which it spends the most.

"Through the Medicare Drug Price Negotiation Program, we will make sure seniors get a fair price on Medicare's costliest prescription drugs, promote competition in the market, and ensure Medicare is strong for beneficiaries today and into the future," Secretary of Health and Human Services (HHS) Xavier Becerra said in a statement

CMS will announce the first 10 drugs on Sept. 1. The negotiation period will start in February and last until August. In September of 2024, CMS expects to publish the negotiated "maximum fair price" that would become effective in 2026.

Big-selling drugs made by Bristol Myers Squibb, Pfizer, and AbbVie are likely to be among the medicines subject to the first round of price negotiations, according to analyses by academics and Wall Street analysts shared with Reuters.

(Reporting by Ahmed Aboulenein in Washington and Michael Erman in New York; Editing by Leslie Adler and Bill Berkrot)

By Ahmed Aboulenein and Michael Erman