News

CMS issues draft guidance on IRA 2028 Drug Price Negotiation Program, 2026-28 MFP Effectuation

16 May 2025

On May 12, 2025, the Centers for Medicare & Medicaid Services (CMS) issued draft guidance for initial price applicability year (IPAY) 2028 of the Drug Price Negotiation Program (DPNP) established by the Inflation Reduction Act (IRA) (Draft Guidance). For the first time, the Draft Guidance begins to address how CMS plans to select and negotiate maximum fair prices (MFPs) for Part B drugs, approach renegotiation of the MFP for drugs already subject to price controls, and consider delay requests for biosimilars for additional years, among other issues. CMS is also soliciting feedback on various issues including Part B-related policies, transparency, burden reduction, and effectuation of the MFP. Comments are due June 26, 2025. Notably, IPAY 2028 will be the last year that CMS by statute can implement the DPNP via guidance. Starting with IPAY 2029, CMS must use rulemaking to implement the DPNP instead.

CMS also used the publication of the Draft Guidance to issue Information Collection Request (ICR) forms for data submission for the small biotech exception, biosimilar delay requests, and renegotiation. CMS is soliciting comment on the ICR forms, with comments due on July 14, 2025. CMS also issued a Fact Sheet outlining, at a high level, key changes and requests for comment in the Draft Guidance and the timeline for the negotiation program for the coming year.

In addition to the above, the documents relevant to this alert are as follows:

CMS’s IPAY 2028 press release
The IPAY 2027 Final Guidance
Our alert on the IPAY 2027 Final Guidance
The ICR forms for data submission for the small biotech exception, biosimilar delay requests, and renegotiation

Need a refresher on the basics of the Drug Price Negotiation Program? Key documents that may be helpful are as follows:

The relevant text of the IRA
Our alerts relating to the legislation passing the Drug Price Negotiation Program are here and here
Our alert on the IPAY 2026 draft guidance and final guidance

Chapter 1 What drugs are eligible for selection for negotiation?

Qualifying single source drug.
- IPAY 2026 and 2027 Final Guidance:CMS uses the following qualifying single source drug (QSSD) definition: a Food and Drug Administration (FDA)-approved drug/biological product for which at least 7/11 years have elapsed since approval/licensure and for which there is no generic/biosimilar product on the market, inclusive of all dosage forms and strengths with the same active moiety/ingredient and the same New Drug Application (NDA)/Biologics License Application (BLA) holder. In the IPAY 2027 Guidance, CMS clarified that it would investigate products with different trade names marketed under different NDAs/BLAs containing the same active moiety/active ingredient for purposes of identifying potential QSSDs. CMS also stated that “if a drug is a fixed combination drug with two or more active moieties / active ingredients, the distinct combination of active moieties / active ingredients will be considered as one active moiety / active ingredient for the purpose of identifying potential [QSSDs].”
- Draft Guidance:
  - As to fixed combination drugs, CMS is now considering an exception to its policy of treating distinct combinations of active moieties / active ingredients as distinct QSSDs. CMS is focused on fixed combination drugs for which one of the active ingredients or active moieties contained “is not biologically active against the disease state(s) the drug is indicated for and thus does not result in a clinically meaningful difference,” such as an active moiety/ingredient that affects bioavailability. CMSis soliciting comments on how it might consider grouping such fixed combination drug products with products containing at least one but not all of the active moiety(ies) / active ingredient(s) into the same QSSD.
  - As to deemed biologics, CMS specified March 23, 2020 will be the date used for determining eligibility for selection. “Deemed biologics” are biological products previously marketed under NDAs but whose applications were subsequently deemed to be approved BLAs on March 23, 2020, pursuant to the Biologics Price Competition and Innovation Act of 2009. Under the Draft Guidance, and consistent with CMS’s informal policy adopted for IPAY 2027, deemed biologics will not become potentially eligible for selection until 11 years after March 23, 2020 (although note that CMS did not adopt this interpretation for IPAY 2026).
Exclusions from QSSD and negotiation-eligible drug definitions.
- IPAY 2026 and 2027 Final Guidance: Drugs that are designated as orphan drugs for only one rare disease or condition and for which the only approved indications are for that disease or condition; certain plasma-derived products, and low spend Medicare drugs for which total Parts B and D expenditures over a specified period are less than $200 million, increased over time by an inflation factor, are excluded from the QSSD definition.
  - Qualifying small biotech drugs are also excluded, i.e., a drug of a manufacturer:
    - Whose total 2021 Part B or D drug expenditures constitute no more than 1 percent of total 2021 Part B or D expenditures for all drugs of all manufacturers; and
    - Whose total 2021 Part B or D drug expenditures constitute at least 80 percent of total 2021 Part B or D expenditures for all drugs of that manufacturer.
- Draft Guidance:
  - No significant changes as to the orphan drug, plasma derived product, and low spend Medicare drug exclusions.
  - As to small biotech drugs, CMS proposes to identify drugs subject to this exclusion on two tracks, one for Part B and one for Part D expenditures. A drug will be excluded if it qualifies under either track.

Chapter 2 Biosimilar delay provision.

IPAY 2026 and 2027 Final Guidance:
- CMS set forth the process for delaying, by one (Initial Delay Request) or two (Additional Delay Request) years, selection for negotiation of a biologic that would otherwise be selected, where:
  1. The biologic would have been an extended-monopoly drug if selected,
  2. The delay is requested by a biosimilar manufacturer,
  3. The biosimilar manufacturer submits certain specified information,
  4. CMS determines that there is a high likelihood that the biosimilar will be licensed and marketed within two years of what otherwise would be the selected drug publication date, and
  5. Certain disqualifying circumstances are not present.
- CMS explained that, for purposes of making biosimilar delay determinations, the agency will consider whether the totality of the circumstances demonstrates a high likelihood that the biosimilar manufacturer will engage in bona fide marketing of the biosimilar.
Draft Guidance:CMS adopted new procedures for submission and review of Additional Delay Requests and for failure of a biosimilar to be licensed and marketed following a successful Initial Delay Request. As CMS noted, these procedures are not relevant for IPAY 2028 because CMS did not grant any Initial Delay Requests for IPAY 2027. CMS seeks feedback on these processes for consideration in rulemaking applicable to future IPAYs.
- As required by statute, CMS will also review an Additional Delay Request to determine whether it demonstrates, by clear and convincing evidence, “that a significant amount of progress has been made by the Biosimilar Manufacturer towards licensure and marketing of the Biosimilar.” CMS will assess such progress “based on a holistic review” of documentation submitted with the Additional Delay Request, including “documentation in any follow-up requests.” CMS will notify a biosimilar manufacturer of its determination regarding an Additional Delay Request on or after the date that the selected drug list for an applicable IPAY is published.
- If an Additional Delay Request is denied, or if a Biosimilar Manufacturer chooses not to submit an Additional Delay Request following a successful Initial Delay Request, CMS generally will include the Reference Drug on the next selected drug list (unless the Reference Drug no longer meets the criteria to be a selected drug), and the Reference Manufacturer will owe a rebate “for the years that the manufacturer would have provided access to the MFP for the Reference Drug but for the delay.” The rebate amount will depend on whether the Reference Drug is covered/payable under Part D or Part B, and on whether the Reference Drug has transitioned to a long-monopoly drug during the delay.
- Additionally, CMS is soliciting comments on the “high likelihood” determination.

Chapter 3 What about the bona fide marketing standard?

IPAY 2026 and 2027 Final Guidance: Pursuant to statute, a drug/biological product may not be selected for negotiation where a generic/biosimilar product was “marketed” by the selected drug publication date or during the negotiation period. For purposes of determining when a product was “marketed,” CMS uses a “bona fide marketing” standard under which it considers a drug to be marketed when the totality of the circumstances, including Medicare Part D prescription drug event (PDE) data and average manufacturer price (AMP) data for a specified 12-month period, establish that the drug is the subject of “bona fide marketing.”
Draft Guidance: No significant changes, but CMS requests comments on additional data the agency is considering reviewing for drugs payable under Part B, as well as those covered under Part D, including, when available, average sales price (ASP) data, Medicaid State Drug Utilization Data, and/or data from a nationally representative and commercially available database. The Draft Guidance also includes illustrative examples of circumstances where CMS would consider the bona fide marketing standard to be met.

Chapter 4 What about compound drugs?

IPAY 2027 Final Guidance: CMS stated that “for operational reasons at this time for 2026 and 2027, MFP refunds will not be required for PDE records for selected drugs that were billed as compounds.” CMS noted, however, that it “is exploring operational changes to the PDE record layout that would provide CMS with visibility into data on the quantity dispensed for a selected drug when that selected drug is billed as a compound, at which point such PDE record may be used to allow for inclusion in the claim-level data elements that are included in the file transmittal.”
Draft Guidance: CMS extended the exclusion for compounded drugs (for now). For IPAY 2028, CMS will not require MFP refunds for PDE records for selected drugs that were billed as compounds but is continuing to explore operational changes to the PDE record layout that would provide CMS with visibility into data on the quantity dispensed for a selected drug when that selected drug is billed as a compound.

Chapter 5 How will drugs be selected for negotiation?

IPAY 2026 and 2027 Final Guidance: Consistent with the statute, CMS would identify the 50 qualifying QSSDs with the highest total Part D expenditures over a specified 12-month period using PDE data. CMS would then rank these drugs, highest to lowest, and select the 15 highest ranked drugs on this list for negotiation, unless removed from the list on account of a delay in the selection of a biological product for negotiation.
Draft Guidance: Starting in IPAY 2028, drugs that are payable under Part B now may be selected for negotiation.
- CMS will identify negotiation-eligible drugs based on the 50 highest spend drugs under Part B and the 50 highest spend drugs under Part D. To identify negotiation-eligible Part B drugs, CMS will determine total expenditures by using Part B claims data for dates of service between November 1, 2024 and October 31, 2025, to calculate total allowed charges (“meaning the amount that is inclusive of the beneficiary coinsurance and Medicare payment for the covered Part B item or service”). Consistent with the statute, CMS will exclude expenditures for a drug that are bundled or packaged into the payment for another service. The process for identifying negotiation-eligible drugs payable under Part D remains the same.
- CMS will then combine total expenditures under Part B and Part D for those 100 drugs and rank them, from highest to lowest, and select the top 15. If a drug appears on both high spend lists, CMS will only rank it once for selection purposes, based on the combined total expenditures. CMS will select the 15 highest ranked drugs based on their combined Part B and Part D expenditures, unless removed from the list on account of a delay in the selection of a biological product for negotiation. CMS could have proposed to rank based on each drug’s respective Part B and Part D expenditures but has not addressed this approach at this time.

Chapter 6 How will the negotiated price be set?

A single MFP.
- IPAY 2026 and 2027 Final Guidance: CMS stated that it would negotiate a single MFP, subject to a single MFP ceiling, across all dosage forms and strengths of the selected drug and based on a 30-day equivalent supply.
- Draft Guidance: No significant changes, but CMS is soliciting comment on two issues:

Whether an alternative approach to negotiating the single MFP would be more appropriate, including by negotiation on a per-unit basis as opposed to a 30-day equivalent supply basis.
“[O]n how MFP effectuation should apply in cases where the selected drug is not paid under section 1847A of the Act,” including where, absent the MFP, payment would have been made under Part B on a basis other than ASP or wholesale acquisition cost (WAC). For example, CMS has authority to substitute AMP for ASP where ASP exceeds AMP by an applicable threshold, currently set at 5 percent. As another example, some products, like certain vaccines, are paid on the basis of 95 percent of average wholesale price (AWP) rather than ASP or WAC. CMS seems to be suggesting that if these amounts calculate as lower than the MFP plus 6 percent, it would use the other payment amount.

MFP ceiling.
- IPAY 2026 and 2027 Final Guidance: The MFP must be capped at the lower of a specified percentage of an applicable average non-federal average manufacturer price (non-FAMP) or an amount reflecting the sum of the enrollment-weighted Part D negotiated prices.
- Draft Guidance: CMS addressed additional considerations for Part B drugs, including drugs that are both payable under Part B and covered under Part D. CMS stated that it will calculate a single ceiling across all dosage forms and strengths of a drug, at the lower of a specified percentage of (1) an applicable average non-FAMP, or (2) an amount calculated as follows:

For a selected drug covered under Part D but not payable under Part B, the sum of the plan-specific enrollment weighted amounts per a 30-day equivalent supply of a National Drug Code (NDC)-9. This was the approach for Part D drugs under the IPAY 2026 and 2027 Final Guidance.
For a selected drug payable under Part B but not covered under Part D, a weighted average of the section 1847A(b)(4) payment amount under Medicare Part B (i.e., the lesser of ASP or WAC), not adjusted for sequestration, for all quarters in the calendar year prior to the selected drug’s publication date (i.e., an annualized section 1847A(b)(4) amount) per 30-day equivalent supply of an NDC-9. The Draft Guidance also addresses how CMS intends to calculate the applicable payment amount in special circumstances, such as when a selected drug is payable under Part B but not paid based on section 1847A(b)(4) (e.g., when payment absent the MFP is based on 95 percent of AWP instead of on ASP or WAC, such as for certain vaccines), or when the reported ASP or WAC is negative, zero, or missing for one or all applicable NDC-11s assigned to a HCPCS code in one or more quarters within the calendar year.
For a selected drug payable under Part B and covered under Part D, an amount equal to the weighted average, per 30-day equivalent supply of each NDC-9, of the annualized section 1847A(b)(4) amount for Part B payment for the calendar year prior to the selected drug’s publication date and the sum of the plan-specific enrollment weighted amounts (referred to as the “combined Part B and Part D amount”).

Manufacturer-submitted information.
- IPAY 2026 and 2027 Final Guidance: By statute, CMS is required to consider certain information submitted by the manufacturer in negotiating the MFP, including information regarding research and development costs; production and distribution costs; federal financial support for discovery and development; pending and approved patents, FDA exclusivities, and FDA applications; and market, revenue, and sales volume data. CMS clarified in the IPAY 2027 Final Guidance that manufacturers are obligated to “timely report certain updates to data submissions,” including for restatement of applicable government pricing data.
- Draft Guidance: No significant changes, but CMS is soliciting comments on whether to collect additional forward-looking “market data” for the selected drug for the negotiation period and/or price applicability period, such as forecasted net revenue and volume.
Initial offer: identification and pricing of therapeutic alternatives.
- IPAY 2026 and 2027 Final Guidance: CMS elaborated on the process for developing an initial offer based on the pricing of any identified therapeutic alternatives. In identifying the prices of identified therapeutic alternatives, CMS indicated that it uses “the lower of Part D total gross covered drug cost (TGCDC) net of DIR and [Coverage Gap Discount Program (CGDP)] payments . . . for the therapeutic alternative(s), and/or the ASP for the therapeutic alternative(s) that is covered under Part B, or the MFP for initial price applicability year 2026 selected drugs that are therapeutic alternatives to determine a starting point for developing an initial offer . . . .” (emphasis added). CMS also stated it would aim to share redacted data about evidence of alternative treatments with the Primary Manufacturer of a selected drug during the negotiation process “when feasible.”
- Draft Guidance:
  - For Part D covered therapeutic alternatives used in developing the initial offer, CMS proposes minor methodological refinements. CMS would “use the lower of either: (1) the Net Part D Plan Payment and Beneficiary Liability, which reflects TGCDC net of DIR and CGDP or Manufacturer Discount Program payments, as applicable; or (2) the MFP for selected drugs negotiated for a prior initial price applicability year, if applicable.” This is similar to IPAY 2027 except that CMS would also consider non-CGDP Manufacturer Discount Program payments.
  - CMS proposes a new methodology for Part B covered therapeutic alternatives. When assessing a therapeutic alternative(s) payable under Part B to determine a starting point for the initial offer, “CMS will use the lesser of ASP or WAC” in order to better align with the payment amount under section 1847A(b)(4) of the Social Security Act.
  - CMS proposes a weighting methodology that would account for therapeutic alternatives covered under both Part B and Part D. In situations where a drug has multiple therapeutic alternatives, CMS will consider therapeutic alternatives within each indication and weight such prices by utilization or other patterns of use.
  - CMS solicits comment on the following:
    - The “possibility and feasibility” of considering health care services payable under Medicare Part A or Part B as potential therapeutic alternatives to the selected drug for future rulemaking.
    - Alternative ways to determine the starting offer for particular drugs with more than one therapeutic alternative.

Chapter 7 In addition to the requirement to provide access to the MFP, what will happen after the MFP is set?

Publication of the MFP.
- IPAY 2026 and 2027 Final Guidance: The MFP and explanation of the MFP are published on the CMS website by the applicable statutory deadlines. In the IPAY 2027 Final Guidance, CMS also clarified that the published explanation is to “contain the single MFP for a 30-day equivalent supply of the selected drug, the NDC-9 per unit price, and NDC-11 per package price and will be updated annually to show the inflation-adjusted MFP for the selected drug,” and revised the number of rounded decimal places in the file layout to publish the NDC-9 per unit price to the sixth decimal place, aligning with how CMS publishes other prices.
- Draft Guidance: No significant change. CMS added that it will include the HCPCS code level price in the MFP file, in addition to the NDC-9 per unit price and NDC-11 per package price.
Application of the MFP.
- IPAY 2026 and 2027 Final Guidance: CMS indicated that it would cap the single MFP per 30-day equivalent supply at the drug level, which would then be converted into an as-applied MFP at the unit or package level using a WAC price ratio to apply the single MFP on the NDC-9 level, which amount is then further converted to the NDC-11 level. Manufacturers would have 21 days to submit a suggestion of error for calculating the MFP ceiling or as-applied MFP. CMS clarified that, as feasible, it intends to provide manufacturers with information on certain CMS calculations during and after the negotiation period, including updates to its computation for applying a single MFP across dosage forms and strengths of the selected drug on account of new NDCs. Finally, “CMS intends to address, in future guidance, how the MFP application could be adjusted by updating the quotient of total quantity dispensed to 30-day equivalent supply based on observed PDE data for existing NDCs that lacked sufficient WAC or PDE data in [CY] 2024 to be included in the initial calculation of WAC ratios, and new NDCs launched after the initial calculation of WAC ratios.”

Draft Guidance: CMS updated its process for applying the MFP across dosage forms and strengths to include a process for converting the single MFP into an MFP per billing unit. CMS also clarified that it will adjust the WAC ratios used to apply the MFP based on updated/observed PDE data and Part B claims data where the original data used to calculate these ratios was incomplete and provided a methodology to address the same.

Chapter 8 What is the timeline for the IPAY 2027 negotiation process?

IPAY 2026 and 2027 Final Guidance: The IPAY 2027 timeline largely mirrored that of IPAY 2026, except that the statutory period between the deadline for execution of the negotiation agreement and the end of the negotiation period was one month shorter than that for IPAY 2026, causing certain phases of the process to be marginally shorter. Among other things, changes to IPAY 2027 from the IPAY 2026 timeline included patient focused roundtable events, a timeline for manufacturer meetings with CMS, and additional opportunities to exchange written offers.
Draft Guidance: No significant changes in the Draft Guidance to the IPAY 2027 timeline. CMS added that it may incorporate drugs selected for renegotiation into its roundtable events. CMS also clarified that, while Primary Manufacturers may share information during meetings before the initial offer (i.e., the section 1194(e)(2) data on therapeutic alternatives), new manufacturer-specific data (i.e., the section 1194(e)(1) data, which includes research and development and other costs) will not be considered after the March 1, 2026, deadline for IPAY 2028. However, CMS suggests that manufacturers may still submit supplemental information in connection with meetings after the March 1 deadline in order to contextualize the information previously submitted.

Chapter 9 MFP effectuation.

In general.
- IPAY 2026 and 2027 Final Guidance: CMS finalized the process for MFP effectuation for IPAYS 2026 and 2027. CMS indicated that manufacturers have discretion to provide access to the MFP either through an up-front discount or through an after-the-fact rebate, but that manufacturers must ensure that dispensing entities are reimbursed for the difference between their acquisition cost and the MFP within 14 days.
- Draft Guidance: CMS extended the 2026 and 2027 MFP effectuation policies to 2028 for selected drugs covered under Part D and indicated an intention to provide detailed policy in the future for providing access to the MFP for selected drugs payable under Part B. Beginning in 2028—for drugs selected for negotiation for IPAY 2028 or renegotiation for 2028—manufacturers must also provide access to the MFPs for hospitals, physicians, and other suppliers (Part B providers) with respect to MFP-eligible individuals who are furnished or administered selected drugs payable under Part B. However, CMS did not include any detailed proposed policies on providing access to the MFP for drugs payable under Part B in 2028. Instead, CMS indicated it intends to align the polices and operations for providing access to the MFP for selected drugs payable under Part B with those for selected drugs covered under Part D.
  - CMS is soliciting comments regarding how MFP effectuation for Part B refund payments may differ from the process outlined for drugs covered under Part D.
  - CMS also specifically solicits comments regarding “potential private market solutions that could offer an alternative to the Medicare Transaction Facilitator (MTF) and the extent to which interested parties perceive a need for ongoing MTF support over time.”
Role of the MTF.
- IPAY 2027 Final Guidance:CMS expanded the role of the MTF to include data facilitation and payment facilitation. The MTF—via the MTF Data Module (MTF DM)—will facilitate the exchange of data between manufacturers and dispensing entities for verifying a given dispensed prescription’s eligibility for the MFP. Participation in the MTF DM will be mandatory for manufacturers and dispensing entities. The MTF also will offer payment facilitation on a voluntary basis for manufacturers—via the MTF Payment Module (MTF PM)—to assist with effectuating the MFP. The MTF PM will allow for the pass through of manufacturer funds to dispensing entities to facilitate payment of MFP-based refunds. CMS noted that, “under no circumstances will federal funds be used for these transactions or to resolve or make payment related to disputes that may arise between parties when the MTF PM is utilized, including with respect to nonpayment or insufficient payment by a particular party.”
- Draft Guidance: Detailed updates on the MTF with respect to Part B remain outstanding. CMS engaged separate contractors to support the MTF DM data exchange and MTF PM payment exchange functions for selected Part D drugs. For drugs payable under Part B, CMS intends to use the MTF to facilitate data exchange and intends to offer the MTF to facilitate payment exchange, in alignment with MTF functionality for drugs covered under Part D; at this time, however, CMS is not providing detailed policies on the role of the MTF for selected drugs payable under Part B. CMS is soliciting comments regarding MFP effectuation for drugs payable under Part B.
MFP payment mechanism.
- IPAY 2027 Final Guidance:CMS finalized that manufacturers may provide access to the MFP either prospectively to the dispensing entity (i.e., as an up-front discount) or retrospectively (i.e., as an after-the-fact rebate/refund). Manufacturers must maintain certain documentation illustrating that they made the MFP available, including if through an alternative payment arrangement with a dispensing entity outside of the MTF.
  - CMS also finalized that dispensing entities may self-identify as anticipating “material cashflow challenges because of potential delays created by reliance on retrospective MFP refunds within the 14-day prompt MFP payment window,” and required manufacturers to develop a process for mitigating material cashflow concerns for dispensing entities in their MFP effectuation plans.
- Draft Guidance: Detailed updates on the MTF with respect to Part B remain outstanding. CMS noted that it intends to align Part B policies and operations with those under Part D and provide such guidance in the future. As discussed above, the agency is soliciting comments on how the effectuation of MFP refund payments for drugs payable under Part B may differ from what is in place for drugs covered under Part D
Manufacturer MTF participation.
- IPAY 2027 Final Guidance: Participation in the MTF DM is mandatory for manufacturers. Participation in the MTF PM is voluntary for manufacturers, provided the manufacturer and the dispensing entity “establish a mutually agreed-upon method for effectuating the MFP outside of the MTF PM.”
- Draft Guidance:CMS specified deadlines for registering with the MTF DM and provided additional information regarding MTF participation user agreements. Manufacturers with MFPs for IPAY 2027 and IPAY 2028 must register with the MTF DM by April 1 of the calendar year before the MFP would go into effect. For manufacturers with an MFP that will take effect on January 1, 2026, CMS will contact each manufacturer regarding the deadline for registering as the MTF system becomes available for enrollment. Manufacturers will be required to sign user agreements to participate in the MTF. Manufacturers that elect to participate in the MTF PM will also sign a MTF PM user agreement. CMS addressed specific circumstances that may arise, including if a manufacturer transfers ownership of a selected drug, impacts of terminating participation in the Negotiation Program with respect to a selected drug, and adding selected drugs to the user agreement if a manufacturer has multiple selected drugs for one or more IPAYs, among others.
Dispensing entity MTF participation.
- IPAY 2027 Final Guidance:MTF DM participation is mandatory for dispensing entities.CMS stated that it “intends to also propose in a future rulemaking to require Part D plan sponsors to include in their pharmacy agreements provisions requiring dispensing entities to enroll in the MTF DM for purposes of data exchange.” With respect to the MTF PM, CMS indicated that, “[i]f the Primary Manufacturer participates in the MTF PM and transmits MFP refund payments to the MTF PM to be passed through to the dispensing entity, then the MTF PM will pass through the payment to the dispensing entity . . . . However, this does not preclude a dispensing entity from reaching an outside agreement with a Primary Manufacturer participating in the MTF PM for a separate arrangement to pay MFP refunds outside of the MTF PM.”
- Draft Guidance: No significant change. Separately, CMS previously finalized in rulemaking the proposed requirement that Part D plan sponsors include provisions in their pharmacy agreements requiring pharmacies to be enrolled in the MTF DM. Like manufacturers, dispensing entities will be required to sign an MTF DM user agreement with CMS during the enrollment process.
MFP eligibility determination process.
- IPAY 2027 Final Guidance:CMS finalized a process for verifying the MFP eligibility of individuals dispensed selected drugs.
- Draft Guidance. No significant change.
Data requirements.
- IPAY 2027 Final Guidance:The list of required data elements to be exchanged between the manufacturer and the MTF DM were adopted. These include certain claim-level data elements to support verification of the claim as MFP-eligible, certain claim-level payment data elements to confirm whether and how the manufacturer made the MFP available, certain data elements to support a manufacturer with identifying 340B-eligible claims, and additional elements to support the MTF PM. In the 2027 IPAY Final Guidance, CMS clarified that, to align with its exclusion of selected drugs billed as compounds from MFP effectuation, it would exclude any PDE data with a compound code indicating the PDE record is for a compounded drug from the claims transmitted to the manufacturer for effectuation of the MFP.
- Draft Guidance: CMS included new claim-level data elements. New data elements that manufacturers will receive from the MTF DM include information about the previously paid MFP refund, if any, and if an adjustment to a previously addressed claim is made. Another new data element will allow dispensing entities to specify a preference for electronic or paper payment. CMS also modified the mandatory payment elements manufacturers must submit, such as by requiring the manufacturer to update the “Transaction Code” from the claim-level data elements provided to the manufacturer. The complete elements are listed in the Draft Guidance. We have separately addressed claims data supporting 340B nonduplication below.
The 14-day MFP prompt payment window.
- IPAY 2027 Final Guidance: The 14-day MFP prompt payment window starts with the transmission of the claim-level data by the MTF to the manufacturer and ends with the transmission of the payment information by the manufacturer to the MTF DM. Manufacturers must transmit the MFP refund amount within 14 days, rather than ensuring the dispensing entity has received the MFP reimbursement within 14 days, to satisfy the 14-day prompt payment window. CMS also clarified that where the MFP payment amount is made available prospectively or outside of the MTF PM, the manufacturer is still expected to submit claim-level payment elements to the MTF DM within the 14-day prompt MFP payment window.
- Draft Guidance: CMS clarified how the MTF DM will handle and process specific claim edits in the Drug Data Processing System (DDPS) for Part D claims. CMS clarified that DDPS data validation edits related to MFP-eligibility must be resolved before the MTF DM transmits to the manufacturer the validated claim-level data elements to initiate the 14-day prompt pay window. CMS intends to maintain a list of DDPS edits that are related to the determination and verification of MFP eligibility and solicits comments and suggestions for DDPS edits to include or exclude in the validation process. CMS further intends to use the MTF DM to facilitate data exchange and solicits comments for how the data flow for Part B claims may differ from what was outlined for Part D claims in the IPAY 2027 Guidance.
  - In addition, CMS notes that manufacturers “may not impose additional reporting requirements on dispensing entities to support MFP eligibility verification,” regardless of whether the manufacturer uses the MTF PM.
MFP payment amount.
- IPAY 2027 Final Guidance:CMS finalized its policy to calculate a “Standard Default Refund Amount” equal to the difference between the WAC and the MFP on the date of dispensing and sought comment on that proposal. It remained the manufacturer’s responsibility to “choose to refund an amount different than the [Standard Default Refund Amount] if the Primary Manufacturer determines some other amount is appropriate to make the MFP available.”
- Draft Guidance: CMS further clarified the process for supporting and validating that a manufacturer has effectuated payment of the MFP.
  - CMS proposes that the MTF DM will issue a receipt file to manufacturers participating in the MTF PM, which will notify manufacturers of receipt and processing of claim-level payment elements by the MTF DM and successful MFP refund status. CMS is soliciting comments on the content for the receipt file.
  - CMS proposes to revise some of the claim-level data elements and proposes that “[i]f the Primary Manufacturer is unable to transmit the claim-level payment elements, for example, if there is a technical breakdown in the transmission process, the Primary Manufacturer must continue to attempt to transmit the claim-level payment elements in good faith until successful transmission of the claim-level payment elements and must maintain documentation of the Primary Manufacturer’s good faith effort in case there is a related complaint or dispute.”
  - CMS also stated it will “not float or issue funds to a dispensing entity on the Primary Manufacturer’s behalf in anticipation of a future MFP refund payment from the Primary Manufacturer to the dispensing entity” and addressed procedures if a manufacturer terminates participation in the MTF PM or transfers ownership of a selected drug to a new Primary Manufacturer.
Manufacturer MFP effectuation plans.
- IPAY 2027 Final Guidance:CMS moved up the plan submission deadline to four months before the start of the initial price applicability year for the selected drug—September 1, 2025, for IPAY 2026—and indicated it will not make manufacturer effectuation plans public. Instead, redacted versions of the plans will be accessible to dispensing entities through the MTF DM. CMS indicated it would establish a standardized form for manufacturers to use that will satisfy the requirements of the written effectuation plan.
- Draft Guidance: CMS will split the MFP Effectuation Plan into two submissions, starting with IPAY 2027, for purposes of facilitating outreach to manufacturers with respect to these plans.The first section of the plan must contain: (i) the manufacturer’s election of whether or not to use the MTF PM; (ii) the manufacturer’s communication plan; (iii) the manufacturer’s approach to dispensing entities who indicate they anticipate having material cashflow concerns at the start of the IPAY; and (iv) information about the manufacturer’s plan if it does not elect to use the MTF PM. The second section will contain all remaining information required in the manufacturer’s MFP Effectuation Plan. The two sections must be submitted to the MTF DM by June 1 and September 1 of the calendar year before the MFP goes into effect.CMS also indicated that at this time it will not include detailed information on MFP Effectuation Plans for selected drugs under Part B.
Disputes.
- IPAY 2027 Final Guidance:CMS indicated that it would establish a centralized intake system to address complaints and disputes related to MFP availability and MTF functionality. The system would contain two “tracks,” one for disputes initiated by manufacturers or dispensing entities, i.e., “specific, identifiable challenge to a technical aspect of the MTF system and process,” and one for complaints, i.e., anything that is not a dispute, which would be available to the public as well as manufacturers and dispensing entities. Complaints and disputes must be submitted no later than 120 calendar days from the date of the subject of the complaint or dispute. The 14-day prompt MFP payment window will not be tolled for a claim in dispute. Instead, resolution of a dispute leading to a reversal or adjustment of the MFP refund will be addressed through the MTF PM credit/debit ledger system if the manufacturer is enrolled in the PM, and, if that is not the case, by a method agreed upon by the manufacturer and the dispensing entity.
- Draft Guidance: No significant changes. CMS is soliciting comments regarding how the complaint and dispute process should differ for drugs payable under Part B, and, particularly, about the types of documentation CMS should consider when a complaint is filed for a drug payable under Part B.

Chapter 10 Nonduplication of the MFP and the 340B ceiling price.

IPAY 2027 Final Guidance: CMS reiterated across guidance documents that CMS would not assume responsibility for “deduplicating” the MFP and 340B ceiling price and instead indicated that it would be the manufacturer’s responsibility to resolve any MFP-340B duplication outside of the MTF process. CMS indicated that it would provide a mechanism for identifying 340B-eligible claims through the payment elements in the MTF, namely an opportunity for dispensing entities to voluntarily report a 340B Claim Indicator.
Draft Guidance: No significant change. The manufacturer’s MFP effectuation plan must include details of its process for deduplicating 340B covered units for a selected drug. CMS noted that, “[b]eginning January 1, 2025, the ‘Submission Clarification Code’ value of ‘20’ and the ‘Submission Type Code’ value of ‘AA’ w[ere] added to the PDE record to indicate a 340B claim” and reiterated that the dispensing entity could voluntarily provide these indicators to the MTF via the “340B Claim Indicator” data element. CMS reiterated that it will “continu[e] to explore the feasibility of incorporating 340B-related transactional data from 340B covered entities or their [third party administrators (TPAs)] identifying claims eligible under section 1193(d)(1) of the Act into MTF processes in the future,” including considering incorporating asynchronous 340B data in to the MFP validation procedures.

Chapter 11 Renegotiation.

Identification of drugs for renegotiation. Consistent with the statute, CMS proposes to identify renegotiation-eligible drugs based on change in monopoly status of the drug (i.e., a drug becomes an extended- or long-monopoly drug); newly added indications, including, potentially, off-label use identified in evidence-based clinical practice guidelines; and whether there was a material change in any factor in section 1194(e) of the Act. All drugs eligible for renegotiation due to a change in monopoly status must be selected for renegotiation. Of the remaining renegotiation-eligible drugs, CMS must select those for which renegotiation is expected to “result in a significant change” in the MFP, which CMS proposes to define as “the likelihood that the new indication or material change would result in a renegotiated MFP that represents a 15 percent or greater change relative to the current MFP” and “whether such a change in the MFP for the renegotiation-eligible drug would have a significant impact on the Medicare Program” based on a holistic inquiry. To inform renegotiation eligibility, CMS proposes to collect voluntary submissions from manufacturers and use publicly available information from the Drugs@FDA and Center for Biologics Evaluation and Research databases.
- CMS proposes that drugs selected in IPAY 2026 or 2027 with Part B utilization are likely to be renegotiation-eligible and subsequently selected, and once renegotiated prices are set, the renegotiated MFP will apply beginning in IPAY 2028 to both Part B and Part D claims; absent renegotiation, manufacturers would not have to provide access to the MFP on Part B utilization for drugs that were selected for IPAYs 2026 and 2027. Further, “any renegotiated MFP will apply to all formulations across dosage forms and strengths of the selected drug,” when the drug is payable under Part B only, Part D only, or both.
Timing of selection for renegotiation. CMS proposes that renegotiation eligibility and selection analysis will, for IPAY 2026 selected drugs, begin approximately 15 months after the end of the negotiation period for such drugs (August 1, 2024), and for IPAY 2027 selected drugs, immediately after the end of the negotiation period for such drugs (November 2025). The deadline for selection and for the updated MFP to become available is the same as for drugs otherwise selected for negotiation for IPAY 2028.
Process of renegotiation. CMS proposes to collect new data for all drugs selected for renegotiation from manufacturers and interested parties as to all section 1194(e)(1) factors (i.e., the manufacturer-specific data) and solicit feedback on the section 1194(e)(2) factors (i.e., evidence about alternative treatments).
- CMS will not offer or agree to a counteroffer of an MFP that exceeds the previously determined ceiling price, subject to certain adjustments to that ceiling price to account for Part B data, changes to the applicable percent of non-FAMP as a result of a change in monopoly status, and other adjustments to the ceiling to account for inflation.
- CMS will otherwise “to the extent practicable” establish a process for developing the initial offer and renegotiation process consistent with the statutory requirements for the first round of negotiations described previously.
Availability of renegotiated MFP. Primary Manufacturers must make the initial MFP available for all dispenses to MFP-eligible individuals on or before December 31, 2027, and the renegotiated MFP available, if applicable, for dispenses on or after January 1, 2028.

Chapter 12 But wait, there’s more!

MFP-eligible individuals in 2026, 2027, and 2028.
- IPAY 2026 and 2027 Final Guidance: CMS indicated that it did not expect manufacturers to provide access to the MFP for MFP-eligible individuals enrolled under Part B, including individuals enrolled under Part C. Instead, manufacturers need only provide access to the MFP for drugs dispensed to an MFP-eligible individual at a pharmacy, mail order service, or other dispensing entity with respect to individuals enrolled under Part D or a Medicare Advantage Prescription Drug (MA-PD) plan under Part C.
- Draft Guidance: CMS is proposing that starting with IPAY 2028, manufacturers will provide access to the MFP with respect to MFP-eligible individuals under Parts B, C, and D.
Enforcement and termination of the negotiation agreement.
- IPAY 2026 and 2027 Final Guidance: The statute subjects manufacturers to significant civil monetary penalties for: (1) failing to offer the MFP with respect to a Medicare beneficiary; (2) violating the terms of the negotiation agreement, including the requirement to timely submit the requisite information to CMS, and (3) knowingly providing false information with respect to certain aggregation rules concerning the small biotech exception and the biosimilar delay provisions. The IPAY 2027 Final Guidance finalized, as substantive violations of the agreement, (4) “failure to meet the MTF reporting requirements,” (5) “failure to enroll in the MTF DM,” and (6) “failure to submit a plan for making the MFP available.”
- Draft Guidance: The Draft Guidance adds the following as additional (or revised) substantive violations that can form the basis of civil monetary penalties:
  - “Failure to submit data requested by CMS in accordance with its oversight responsibilities.”
  - “Failure to provide information required as part of the renegotiation process.”
  - “Failure to make the MFP available to MFP-eligible individuals, and to pharmacies, mail order services, or other dispensing entities, and, beginning in 2028, for drugs selected for initial price applicability year 2028 or with a renegotiated MFP for initial price applicability year 2028, hospitals, physicians and other provider of services and suppliers” (new draft portion emphasized).
  - “Failure to pay a biosimilar delay rebate by the deadline established by CMS in future rulemaking.”
Part D plan requirements.
- IPAY 2026 and 2027 Final Guidance. Consistent with statute, Part D plans must include selected drugs on their formularies. CMS also stated that it would implement a formulary review process “to assess: (1) any instances where Part D sponsors place selected drugs on non-preferred tiers, (2) any instances where a selected drug is placed on a higher tier than non-selected drugs in the same class, (3) any instances where Part D sponsors require utilization of an alternative brand drug prior to a selected drug with an MFP (i.e., step therapy), or (4) any instances where Part D sponsors impose more restrictive utilization management (i.e., step therapy and/or prior authorization) for a selected drug compared to a non-selected drug in the same class.” In the IPAY 2027 Final Guidance, CMS also indicated it would continue to monitor compliance by Part D plans and could consider new requirements, if it determines Part D sponsors are not providing beneficiaries with meaningful access to selected drugs.
- Draft Guidance: No significant changes. CMS noted that the statute specifies that plan sponsors may remove selected products from formulary if such removal is permitted by regulation. CMS cited 42 CFR § 423.120(e)(2)(i), which allows plan sponsors to remove a selected drug and replace it with a new generic or interchangeable biological product of the selected drug if the plan sponsor meets notice and timing requirements. CMS also reiterated that it is monitoring trends in formulary placement and has not seen plan sponsors steer Part D beneficiaries from selected drugs to non-selected drugs.
Reasonable assumptions.
- IPAY 2026 and 2027 Final Guidance: CMS declined to permit the use or submission of reasonable assumptions except where the use of assumptions is explicitly indicated in the Negotiation Data Elements and Drug Price Negotiation Process ICR (e.g., to explain the methodology used to calculate certain costs reported to CMS).
- Draft Guidance: No significant changes, as CMS did not discuss reasonable assumptions at all.

Chapter 13 What’s next?

We may learn more about CMS’s intentions regarding data submission for IPAY 2028 when CMS publishes the draft ICR forms in the coming months. Any manufacturer that anticipates selection of a drug/biological product for negotiation for IPAY 2028 or a future year should carefully review the Draft Guidance to consider its impact on any such product.

We will monitor the implementation of the Final Guidance, and any additional guidance CMS issues with respect to the Drug Price Negotiation Program. As always, it is important that you carefully review all such guidance to identify issues relevant to your organization.

Authored by Alice Valder Curran, Melissa Bianchi, Maura Calsyn, James Huang, Samantha Marshall, Katie Kramer, Kathleen Peterson, Caroline Farrington, Xochitl Halaby, Drew Savage, and Viraj Paul.