NORD’s Position on IRA/CMS Drug Negotiation Price Program

Updated: February 22, 2024

View and download our helpful IRA infographic

As part of the Inflation Reduction Act of 2022 (IRA) and for the first time, the Centers for Medicare & Medicaid Services (CMS) will negotiate the price of some prescription drugs available through the Medicare program. This will have significant impacts for some rare disease patients on their ability to afford needed treatments but could also impact broader rare disease drug development.

For many of the more than 30 million Americans living with a rare disease, out of pocket prescription drug costs create significant financial barriers and hinder access to needed therapies.  At the same time, the vast majority of the more than 7,000 known rare diseases do not have an FDA approved treatment. This makes continued research and innovation especially important to the rare disease community.

Unfortunately, the small patient populations and medical complexity associated with rare diseases can create unique challenges to rare disease drug development, and these same complicating factors may also make it more difficult to determine a fair negotiated price for products that treat rare diseases compared to other therapies.

Successful IRA implementation therefore hinges on a careful balance between greater affordability and maintaining appropriate incentives for continued investment in rare disease specific drug development. While CMS’ most recent guidance includes several elements that positively impact the rare disease community, NORD has several concerns we hope the CMS will address to ensure the rare disease community fully benefits from the IRA.

NORD has provided extensive comments and feedback to CMS to ensure the implementation of the IRA works as well as possible for rare disease patients. This included providing detailed overarching comments in April on the initial Drug Price Negotiation Program implementation guidance, issuing specific recommendations in May for how to best include the perspective of rare disease patients and families in the negotiation program, and detailing in June how CMS can include patient perspectives in the offer and counteroffer process for negotiating prices. NORD President and CEO, Peter L. Saltonstall, also penned an op-ed in the journal STAT about the need for Congress to preserve orphan drug incentives by making changes to the IRA.

Below, view NORD’s positions on the Drug Price Negotiation Program implementation guidance offered by the Centers for Medicare and Medicaid Services (CMS).

POSITIVE: The IRA will cap patient out of pocket spending on prescription drugs for Medicare Part D beneficiaries

• Starting in 2025, out of pocket costs for Medicare Part D beneficiaries will be capped at $2,000 per year.
• Monthly out of pocket costs can also be capped starting in 2025, helping to make sure patients aren’t subject to huge out of pocket expenses in the first few months of a plan year before entering into the catastrophic coverage phase.
• CMS is already required to ensure all negotiated drugs are available on formularies, but it can go further by requiring a negotiated drug be placed on a higher formulary tier to further reduce patient out-of-pocket costs and significantly reduce or eliminate step therapy and/or prior authorization barriers.

POSITIVE: CMS will exempt certain rare disease drugs from price negotiation to prevent negative impacts on innovation.

• Under the IRA, certain orphan drugs will be exempted from price negotiation and CMS has made it clear that this exemption includes drugs that have been FDA-approved for multiple indications tied to treating the same rare disease.
• This means drug companies won’t be penalized when they continue to further develop a rare disease drug for additional population subgroups such as children.

CONCERN: CMS’ interpretation of the IRA will disincentivize manufacturers from conducting research and development on a drug to treat multiple rare diseases by making drugs eligible for negotiation if they have more than one orphan designation.  

• Designating a drug as an orphan or rare disease drug allows the pharmaceutical company to leverage incentives such as clinical research funding and an exemption from FDA fees but it does not allow the company to market the drug because it hasn’t yet proven to be safe and effective to treat that specific condition.
• Unfortunately, CMS’ guidance would disincentivize drug companies from doing further research to develop a rare disease drug for additional rare diseases by making that product eligible for negotiation once they have obtained a second designation.
• CMS also has not provided information as to the timing when a previously negotiation-exempt product will become eligible because they obtain orphan designations or indications for additional rare diseases. This is critical information for manufacturers to have when they are making business decisions about pursuing additional orphan diseases for existing products. 

CONCERN: Patients are not being meaningfully engaged in the drug negotiation process.

• Factors such as determining the “value” of and a maximum fair price for therapies selected for negotiation will have important and long-ranging impacts on patients. Incorporation of patient experience data has been instrumental in the development of many rare disease drugs and the value of patient experience data has been increasingly recognized, but details for how this data might be submitted and incorporated into the negotiation process is lacking.
• CMS provides some limited opportunities for public comment, but the timelines are very short, which can make it difficult for patients to provide meaningful input into the negotiation process.
• Ultimately, this may mean that the negotiation process is missing important insights into how patients really see the value of therapies and their alternatives.

CONCERN: CMS fails to meaningfully track the impact of the price negotiation on patients and rare disease drug development.

• The IRA will have a myriad of impacts on patients and the larger healthcare ecosystem; some of these impacts, such as greater affordability of life-altering therapies through out-of-pocket caps, will be unequivocally beneficial, while others, such as the impact on innovation, remain less clear.
• In the rare disease space, data scarcity and limited populations available for study, has unique data challenges which make tracking the impact of the IRA on orphan drugs even more challenging.
• CMS should begin tracking key metrics to monitor and measure impacts on innovation and patient outcomesand issue a request for information (RFI) to establishes key performance indicators (KPIs) and better understand which metrics are most meaningful for tracking long-term positive and negative impacts on patient access and biopharmaceutical innovation.

Just as we have for the past 40 years, NORD is taking a leading role to ensure this law ultimately benefits patients and families living with rare disease. We sent a letter to CMS signed by more than 100 member organizations, detailing the concerns of the rare community regarding the IRA’s implementation. We also mobilized rare disease patients and caregivers, who shared their own messages to CMS about the importance of rare inclusion and considerations for orphan drug development.

Lastly, NORD hosted a webinar with the Centers for Medicare & Medicaid Services where we asked some of the rare community’s most pressing questions about the implementation of the Inflation Reduction Act. Chief of Staff and Senior Advisor for CMS’s Center for Medicare, Kristi Martin, provided answers to NORD’s VP of Policy and Regulatory Affairs, Heidi Ross. Watch our webinar with CMS below: