Achieve significant savings in the future – mass retirees

Since its implementation in the federal Income Reduction Act of 2022 (PL117-169), Mass Retirees has closely monitored the Medicare drug price negotiation program administered by the Centers for Medicare & Medicaid Services (CMS). In previous Voice issues, we described the process CMS implemented to negotiate a maximum fair price (MFP) for each drug with the manufacturers of ten select prescription drugs.

We last reported in the July Voice that negotiations began in February and ended this summer (August 1). Then CMS would release the negotiated MFP for the ten drugs by September 1st.

During the six months of negotiations, CMS held three meetings with each participating pharmaceutical company and attempted to reach a mutually acceptable MFP for the selected drug. For five of the drugs, CMS and the pharmaceutical company jointly agreed to a negotiated MFP for the drug. For the remaining five drugs, CMS sent a written final offer to the pharmaceutical companies, all of which accepted the final offer. Editor's Note: While the program is underway, legal challenges to it continue to be filed by drug manufacturers – so far without success.

CMS stayed on schedule and released the negotiated MFPs for the 10 selected drugs before the September 1 deadline. (See table below.) Effective immediately, CMS has six months (until March 1, 2025) to publish its statement regarding each drug's MFP. It should be noted that the drug prices will then come into force on January 1, 2026.

If enacted, it is estimated that Medicare will save $6 billion in net prescription drug costs, representing a 22% reduction in overall net spending. More importantly, those who enroll in Medicare prescription drug coverage would save an estimated $1.5 billion.

Remember that this is only the first cycle of the program and there are three remaining. An additional 20 Part B or Part D drugs will be selected in 2027, 2028 and 2029 and are scheduled to take effect in 2029, 2030 and 2031, respectively.