Payers Eye Rebate Leverage, UM in Response to Medicare-Negotiated Drug Prices

Now that CMS has revealed the prices of the first 10 drugs subject to Medicare price negotiation, all eyes are on how Part D plans will cover those drugs on their formularies in 2026, when the new prices go into effect.

To that end, a recent poll from Zitter Insights offers some clues about how payers and PBMs are thinking about this thorny question.

The flash poll was conducted after CMS revealed the results of the first round of the Medicare Drug Price Negotiation Program, which was authorized by the Inflation Reduction Act. Through that process, Medicare for the first time set a Maximum Fair Price (MFP) for 10 branded drugs selected due to their high cost and lack of generic or biosimilar competition.

Medicare Part D plans are required to keep all drugs subject to the Medicare Drug Price Negotiation Program on their formularies. And while Part D plans are not prohibited from putting the 10 drugs on non-preferred tiers or subjecting them to additional utilization management, CMS has made it clear that it will carefully review any such moves to ensure they’re appropriate.

The results of the Zitter poll suggest that leaders in the managed care space are indeed considering a variety of options.

For the poll, members and influencers at payer/PBM Pharmacy & Therapeutics committees were asked: Which actions would you consider for plan year 2026 if CMS’s first negotiated drug price (MFP) is below net cost for a drug? They were given five choices and asked to check all that apply.

Among the eight respondents, five said they would use that information to secure rebates from manufacturers of drugs not subject to Medicare price negotiation. And four indicated that they would apply utilization management tactics (e.g., step therapy, prior authorization) to steer Part D members toward rebatable drugs.

Three respondents said they would take additional steps to encourage utilization of generic or biosimilar alternatives. Finally, two respondents each said they would place MFP drugs on higher formulary tiers and leverage the Medicare MFPs as a starting point for negotiations on select agents for their commercial lines of business.

Like AIS Health, Zitter Insights is a division of MMIT.

Jennifer Snow, founder of the health policy and reimbursement consulting firm Apteka LLC, tells AIS Health that some Part D plans may have already tweaked how they cover the 10 drugs selected for negotiation in their 2025 formularies. However, the bulk of any formulary changes that Part D plans are making will be evident next fall when they reveal their 2026 formularies.

Ultimately, how Part D plans will treat the negotiated drugs on their formularies will depend largely on the drug class each therapy is in, Sean Dickson, senior vice president of pharmaceutical policy and strategy at AHIP, said during an Aug. 12 webinar hosted by Cantor Fitzgerald. “It’s going to become extremely class dependent on, are the newer drugs that are not subject to negotiation, do they have substantial therapeutic benefits over these sort of legacy products that are now being subject to negotiation?” he said.

Savings From Negotiations Varied Considerably

The first 10 drugs subject to price negotiation are Eliquis, Enbrel, Entresto, Farxiga, Imbruvica, Januvia, Jardiance, Stelara, Xarelto, and insulins that go by brand names Fiasp and Novolog. When compared to its list price, Januvia’s negotiated price had the steepest Medicare-negotiated discount (79%), while Imbruvica had the lowest discount, at 38%.

CMS estimated that that if the prices it negotiated for those drugs had been in effect in 2023, Medicare would have saved $6 billion, representing 22% lower net spending in aggregate. According to a new report from the Brookings Institution, just three drugs — Enbrel, Eliquis and Stelara — will account for 51.4% of that $6 billion savings estimate.

The goal of the Brookings researchers, they wrote, was to evaluate how the new government-negotiated prices compare to the previous status quo relying solely on Part D prescription drug plans to win price concessions via rebates. “In that sense, the estimates show that the government negotiations are especially significant for drugs where market forces were most limited and therefore had the least impact on producing price concessions,” researchers wrote.

In addition to the initial 10 drugs included in the Medicare Drug Price Negotiation Program, federal officials will choose another 15 Part D drugs for 2027, then 15 Part D and Part B drugs for 2028, and another 20 Part D and Part B drugs for 2029 and later years.

This article was reprinted from AIS Health’s biweekly publication Radar on Drug Benefits.

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