The Centers for Medicare and Medicaid Services (CMS) is implementing the new prescription drug price negotiation program established by the Inflation Reduction Act. Part of this process will be managing confidentiality and transparency. After hosting stakeholder meetings with manufacturers, advocates, and researchers, and reviewing more than 7,500 public comments, CMS released final negotiation guidance in July. Drug manufacturers wanted assurance from CMS about confidentiality regarding proprietary information, with few restrictions on what the manufacturers themselves could publicly divulge about the agency’s approach to negotiation conversations. These priorities were clearly in tension with one another. Other stakeholders wanted data from manufacturers and information about the negotiation process to be available to the public. In its final guidance, CMS balanced manufacturers’ need for confidentiality with public accountability.
Changes to CMS Guidance Strengthened Confidentiality and Transparency
Maintaining Confidentiality
Responding to drug manufacturers’ comments and input, CMS revised its guidance to clarify how the agency will maintain confidentiality. In its initial guidance, CMS required manufacturers to keep ongoing negotiations confidential, but excluded specifics about the agency’s role in maintaining manufacturers’ confidentiality. Manufacturers raised concerns, including wanting assurances that CMS would not share proprietary information, such as research and development costs, with the public.
In its final guidance, CMS states that it will not publicly discuss ongoing negotiations unless the manufacturer publicly discloses proprietary information prior to a final agreement. In a reversal from the draft guidance, drug manufacturers are permitted to publicly disclose information about the negotiation. If they do, CMS can then publicly discuss details of the negotiation. If a manufacturer publicly discloses information that CMS has deemed proprietary, the agency reserves the right to publicly discuss that information, including as part of their public explanation of the final negotiated price, which will be published later.
Ensuring Transparency
Stakeholders, including patient groups, advocates, and researchers, requested transparency regarding the determination of drug prices and the negotiations. Per the statute, CMS is required to publish a public explanation of the final negotiated price by March 1, 2025. While initial guidance indicated CMS would make high-level comments available but not share proprietary information, based on stakeholder comments and requests for additional transparency, CMS updated the guidance to more explicitly explain what will be included in the public explanation.
Final guidance will include an explanation of the nonproprietary data used to make a price determination to provide stakeholders with a better understanding of the information from manufacturers and the public that CMS found useful. Additionally, CMS said it will provide a narrative explanation of any exchange of offers and counteroffers and the negotiation meetings.
Manufacturer and Stakeholder Input Can Help Ensure Successful Implementation
In addition to adopting changes from manufacturers and stakeholders, CMS established additional opportunities for engagement in the first year of negotiation. In its final guidance, the agency added additional meetings with manufacturers in the fall of 2023 to enhance communication ahead of official negotiations. This meeting will give manufacturers and CMS the opportunity to understand the data before negotiations begin. CMS also has committed to additional meetings with patient groups.
Because CMS was successful in soliciting feedback for the first round of negotiation, the agency should consider additional opportunities for manufacturers, stakeholders, and the public to provide input to improve future negotiations. For example, CMS could consider implementing formal opportunities for input to provide ideas for addressing challenges or shortcomings that it faced in the first year.
Conclusion
As a government agency and steward of public funds, CMS is accountable to the public and Congress, and generally must be transparent about its activities. However, successful negotiations may depend on a level of confidentiality to enable frank interaction, which can conflict with transparency. CMS must balance these needs as it implements this new program.
