CMS Dodges the Real Issues in its IRA FAQs

Sometimes, the most important things about an agency guidance document is what it avoids, not what it says.

The Centers for Medicare and Medicaid Services released its inflation Reduction Act document entitled Medicare Drug Price Negotiation Program: “Frequently Asked Questions”. It has some useful information for pharmacies panicking about how they will get paid “negotiated price” under the IRA, but the most important thing about these FAQs is that they studiously avoid the most frequent questions I get. That “regulatory dodge” will not be lost on stakeholders, and it will feed concerns about whether we are headed towards an implementation train wreck. As a consequence, this FAQ is yet more ammunition for those pushing for a manufacturer rebate model.

A. The Problem

The underlying subtext of this document is the encroaching fear that on day one for the implementation of Medicare negotiated price for the first 10 negotiated drugs, January 1, 2026, there just won’t be a system in place that will deliver to pharmacies the correct, discounted price in a timely fashion.

The risk, of course, is that pharmacies, if they are required to buy at list price, are reimbursed at a heavily discounted price, and don’t receive a payment quickly that makes them “whole” for that difference, will just stop stocking and dispensing those drugs.

Though that would be a boon for drug makers with competitive high list, high reimbursement products to which patients would be switched, it would be a disaster for everyone else.

• Patients will lose access to a drug they are dependent on, and their out-of-pocket costs will go up as they start to use that higher cost alternative product.
• The negotiated price drug maker will see its patient population crater (that won’t be just a Medicare issue; if pharmacies don’t stock for Medicare, they almost certainly won’t stock for anyone).
• And the government—and IRA backers—will have to explain why negotiated price isn’t achieving the projected “savings”, because those “savings” won’t materialize.

B. The Questions NOT Really Asked and NOT Really Answered

Take it from an old, wizened regulatory lawyer. The most important thing to focus on, often, in any government document, is what it DOESN’T say.

Here are the most frequently asked questions that I get:

• Q; How quickly will the Medicare Transaction Facilitator, once it receives data from a pharmacy or its agent, get that data to a manufacturer to start the 14 day clock on the drug maker’s payment decision?

• A: [Cue the sound of crickets.] All the FAQ really says about this is that CMS does envision that its “facilitator” will accept data from a pharmacy claims administrator, but it provides nothing in the way of reassuring specifics, even as we are just about to get to T minus one year from the go live date.

Translation: we are working on it, but, as of today, we don’t have a reassuring answer, so please don’t ask any tough follow-up questions. No guarantees on timing, not even a rough ballpark commitment. Yes, we want to able to accept agent submissions, but we can’t tell you how we will do that.

• Q: What’s going to happen when drug makers, who won’t be getting 340B data sufficient to permit them to identify negotiated price and 340B duplicates, inevitably decline to make a payment on day 14?

• A: [Cue the sound of tumble weed rolling across a Western ghost town.] The FAQ makes 2 oblique references to the train wreck that critics fear is coming.

First, the FAQ trumpets that pharmacies and drug makers should work together to resolve these issues—a lovely platitude in light of the disastrous failure to resolve 340B issues after three decades of such “working together”.

Second, there will be a “complaint” mechanism, with a handy dandy form to raise your hand as your pharmacy is desperately seeking a payment.

Translation: You are going to be on your own, at least initially. Good luck to you. Yes, we hold out the possibility of our intervening after you submit a form into the nameless regulatory vacuum that can be CMS, but we aren’t committing to how long it will take us to review your complaint, contact the drug makers, work through the dispute, or secure a resolution. Beyond that, the FAQ continues the deafening silence as to what precisely the roles of CMS and the Health Resources and Services Administration will be with respect to these questions, adding a regulatory agency disconnect to the overwhelming challenges here.

Bottom Line: Even after a complaint is filed, be prepared for the “help” you get to take weeks, folks, if not months in some cases.

By the time the cavalry arrives, you, the pharmacy, may have already decided to switch as many patients as you can to other products and move on. [Cue the sound of a locomotive headed at full speed to a hairpin turn].

Next, the FAQ refers to the fact that CMS has encouraged drug makers to use the “option” of implementing a either a “prospective” or a “retrospective” payment system to effectuate Medicare price.

Translation: CMS is afraid to say the quiet part out loud: its Medicare Transaction Facilitator will not be able to ensure timely, accurate payments, at least initially. In other words, manufacturers are going to have to figure this out and fix the gaps CMS and its contractor leave.

Which leads to the last question that I most frequently get and that REALLY isn’t addressed by the FAQs, not even a little bit.

Q: [Cue the sound of rumbling thunder headed towards you.] How do we square CMS’ notion that a manufacturer prospective or retrospective payment system will cover for the MTF’s failings, like its pretty complete inability to address 340B duplicates, with HRSA’s refusal to “approve” ANY use by drug makers of a “credit” or a “rebate” system?

A: Zilch. Zippo. Zero. There is no there there.

I can’t believe that we are basically a year out and there isn’t even the outline of a workable plan yet.