CMS Issues Final Guidance on IPAY 2028 Drug Price Negotiation Program, 2026-28 MFP Effectuation

• Qualifying single source drug.
  • IPAY 2026 and 2027 Final Guidance: CMS previously defined QSSD as follows: 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 adopted a policy for fixed combination drugs, such 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  • Draft Guidance: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 proposed an exception to its prior policy of treating distinct combinations of active moieties / active ingredients as distinct QSSDs. CMS 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.
    • As to deemed biologics, which were not previously addressed, CMS specified that March 23, 2020, would 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 Under the Draft Guidance, and consistent with CMS's informal policy adopted for IPAY 2027, deemed biologics would not become potentially eligible for selection until 11 years after March 23, 2020 (although note that CMS did not address this issue for IPAY 2026). CMS explained that, “no interested party suggested interpreting the statute to make the March 23, 2020 deemed date for biologics the licensure date for this purpose, and CMS treated the earliest NDA approval date as the approval date for purposes of determining the time since approval under 1192(e)(1). Any biologic selected under that approach, including deemed biologics, would have been on market for at least 11 years before selection.”
  • Final Guidance:
    • As to fixed combination drugs, CMS did not finalize its proposed policy change, and thus will continue to treat distinct combinations of active moieties / active ingredients as distinct QSSDs for IPAY 2028. Acknowledging the complexity of this issue, CMS indicated that it needs additional time to develop objective policy criteria to finalize such a policy. CMS stated its intent to address “program integrity” risks and continue considering the appropriate policy to implement beginning in IPAY 2029.
    • As to deemed biologics, no significant changes were made.  CMS further explained that it chose to notify parties of this interpretation via the selected drug infographic for IPAY 2027 and via the draft guidance for IPAY 2028.
    • As to vaccines for infectious diseases(s), CMS clarified that it will identify a potential QSSD based on a vaccine’s antigen component (reflected in the labeling), including when an update to the antigen component is licensed through a supplemental BLA. In other words, CMS will treat vaccines with different antigen components as distinct QSSDs, regardless of whether the vaccine is licensed under an original or supplemental BLA. CMS will use the earliest date of licensure for an original or supplemental BLA for the potential QSSD identified based on its antigen component for purposes of determining timing eligibility.
• Exclusions from QSSD and negotiation-eligible drug definitions.
  • IPAY 2026 and 2027 Final Guidance: Consistent with the text of the IRA at the time, 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 proposed to identify drugs subject to this exclusion on two tracks, one for Part B and one for Part D expenditures. A drug would be excluded if it qualifies under either track.
  • Final Guidance: CMS aligned its guidance to the recent statutory changes to the orphan drug exclusion, enacted after the Draft Guidance was issued, by the One Big Beautiful Bill Act, referred to as the “Working Families Tax Cuts Act” (P. L. 119-21), broadening the exclusion to products with multiple orphan drug designations and altering the timing for determining eligibility, all beginning with IPAY 2028.
    • The updated orphan drug exclusion covers products designated for “one or more rare diseases or conditions” and for which the product’s only approved indications are for “one or more such rare diseases or conditions” as defined by the Federal Food, Drug, and Cosmetic Act. For purposes of the QSSD definition, the applicable 7- or 11-year period post-approval or licensure, respectively, begins on the first day after the date of the approval or licensure that such product does not, or did not, meet the statutory orphan drug exclusion criteria.
    • For products that lose eligibility for the orphan drug exclusion, CMS clarified that it will use the earlier of (1) the date of approval of a non-orphan indication, or (2) the date on which an orphan drug designation is withdrawn, to the extent such withdrawal results in disqualification for the exclusion, when identifying potential QSSDs.

• 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, as outlined in our IPAY 2028 Draft Guidance alert.
• Draft Guidance: CMS proposed new procedures for submission and review of Additional Delay Requests and for the 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 sought feedback on these processes for consideration in rulemaking applicable to future IPAYs.
  • As required by statute, CMS proposed to 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 proposed to assess such progress “based on a holistic review” of documentation submitted with the Additional Delay Request, including “documentation in any follow-up requests.”
  • 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 proposed to 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 would 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 would 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 solicited comments on the “high likelihood” determination. As CMS explained in the guidance for IPAY 2026 and IPAY 2027, a Biosimilar Manufacturer may satisfy this standard by submitting information demonstrating (1) that patents related to the Reference Drug are unlikely to prevent the Biosimilar from being marketed; and (2) that the Biosimilar Manufacturer would be operationally ready to market the Biosimilar.
• Final Guidance: CMS expanded the circumstances that may satisfy the “high likelihood” standard, provided three examples of “clear and convincing evidence” that might support such determination, and specified documents that could show a Biosimilar Manufacturer’s operational readiness.
  • The patent-related component of the “high likelihood” determination may now be met under an additional circumstance: if neither a court nor the United States Patent and Trademark Office’s Patent Trial and Appeal Board has adversely ruled against the Biosimilar Manufacturer’s legal assertion(s) pertaining to an unexpired patent or patent(s) relating to the Reference Drug and the Biosimilar Manufacturer has clearly specified a launch date for the Biosimilar that (a) precedes the “high likelihood” deadline and (b) is not contingent on the outcome of pending litigation.
  • CMS explained that, consistent with statute, a Biosimilar Manufacturer may demonstrate operational readiness with documents including “(1) disclosures about capital investment, revenue expectations, and actions consistent with the normal course of business for marketing of a biosimilar biological product before February 1, 2028; and (2) a manufacturing schedule that is consistent with the public-facing statements and demonstrates readiness to meet revenue expectations.”

• 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: CMS did not propose significant changes but requested comments on additional data the agency may consider 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 included illustrative examples of circumstances where CMS would consider the bona fide marketing standard to be met.
• Final Guidance: CMS will review ASP data to make the bona fide marketing standard determination for drugs payable under Part B and may consider additional data sources for drugs payable under Part B and/or Part D. The additional data sources CMS may also review are Medicaid State Drug Utilization Data and/or data from nationally representative and commercially available databases.

• 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 was “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.” For consistency, CMS also stated that it would exclude PDE records with a compound code indicating the PDE record is for a compounded drug when calculating the low spend Medicare drug exclusion, the ranking of negotiation-eligible drugs, the total expenditures for the small biotech exception, the ceiling for the MFP, and the application of the MFP across dosage forms and strengths.
• Draft Guidance: CMS extended the exclusion for compounded drugs (for now). For IPAY 2028, CMS would not require MFP refunds for PDE records for selected drugs that were billed as compounds but would continue to explore operational changes for capturing and using such data. Additionally, consistent with its policy for Part D drugs, CMS would exclude Part B claims billed as compounded drugs when calculating the low spend Medicare drug exclusion, the ranking of negotiation-eligible drugs, the total expenditures for the small biotech exception, the ceiling for the MFP, and the application of the MFP across dosage forms and strengths.
• Final Guidance: No significant changes, but CMS specified that, with respect to Part B drugs, it will exclude Fee-for-Service (FFS) Part B claims data billed as compounded drugs and MA encounter data for Part B items and services reported as a compounded drugs when applying its policy.

• 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 could be selected for negotiation.
  • CMS would 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 would 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 would exclude expenditures for a drug that are bundled or packaged into the payment for another service. The process for identifying negotiation-eligible drugs covered under Part D remained the same.
  • CMS would 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 would only rank it once for selection purposes, based on the combined total expenditures. CMS would 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.
• Final Guidance: CMS finalized its proposals from the Draft Guidance but added that it will use MA encounter data for Part B items or services, in addition to Medicare FFS Part B claims, to calculate the total expenditures under Part B for selection purposes. 
  • CMS provided additional information on how the agency will calculate total expenditures using the FFS Part B claims and MA encounter data, including that “CMS will exclude MA encounter data for Part B items and services that are typically payable only as part of a bundled payment.” CMS further clarified that, “[i]f a negotiation-eligible drug appears on only one high-spend list, CMS will also combine total expenditures under both Part B and Part D.” Additionally, CMS formalized a set of “inclusion and exclusion” criteria to determine the PDE data, FFS Part B claims data, and MA encounter data that will be used in calculating total expenditures. Among other requirements, the data must be considered final action and must not be billed or recorded for a compounded drug to be included in the calculation of the total expenditures. 
  • CMS acknowledged commenter concerns with calculating total expenditures under Part D using PDE data that does not reflect net drug costs, while the calculation as to Part B total expenditures does reflect such costs. Total expenditures under Part D are calculated based on “total gross covered prescription drug costs,” which CMS has defined in regulation at 42 C.F.R. § 423.308 to exclude rebates and other price concessions. Commenters noted “that excluding price concessions and other rebates from gross covered prescription drug costs will result in CMS identifying and ranking negotiation-eligible drugs without regards to manufacturer rebates or discounts that Part D plans currently secure on these same products.” While CMS acknowledged these concerns, it noted that “it is calculating such total expenditures in accordance with the definition of ‘total expenditures’ at section 1191(c)(5) of the Act.”

• 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: CMS solicited comment on two issues:
    • Whether an alternative approach to negotiating the single MFP would be more appropriate for Part B drugs, 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). CMS seemed to suggest that if these amounts calculate as lower than the MFP plus 6 percent, it would use the other payment amount.
    • Final Guidance: No significant changes. At this time, CMS is not adopting an alternative approach, but it could revisit these issues in future rulemaking.
• 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 would 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 addressed 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), 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”).
  • Final Guidance: CMS finalized the proposals and added a methodology for calculating the ceiling for a selected drug payable under Part B and covered under Part D but not paid under section 1847A. In these cases, CMS will calculate the ceiling as though the selected drug were only covered under Part D, i.e., as the lower of non-FAMP or the sum of the plan-specific enrollment weighted amounts. In addition, the ceiling calculations will incorporate the above-discussed “inclusion and exclusion” criteria for data used to calculate total expenditures for purposes of identifying negotiation-eligible drugs, as well as the methodology for including MA utilization.
• 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: CMS solicited 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.
  • Final Guidance: No significant changes. CMS will not collect additional forward-looking “market data” at this time, though there is a new requirement that manufacturers report the ASP and ASP units for the last two sales quarters in calendar year 2025 so that CMS has the most recent ASP.
• 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 proposed minor methodological refinements. CMS proposed to continue its approach from IPAY 2027, except CMS would also consider non-CGDP Manufacturer Discount Program payments.
    • CMS proposed 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 proposed 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 would consider therapeutic alternatives within each indication and weight such prices by utilization or other patterns of use.
  • Final Guidance: CMS largely finalized the Draft Guidance as proposed but modified the methodology for Part D covered therapeutic alternatives, to use the lower of the Net Part D Plan Payment and Beneficiary Liability, the MFP, or WAC.

• 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 will “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: CMS proposed that it would 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.
  • Final Guidance: CMS will remove the NDC-11 package price from the public pricing file and list only the NDC-9 unit price and HCPCS code level 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 at 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.
  • Draft Guidance: CMS proposed to update its process for applying the MFP across dosage forms and strengths to include a process for converting the single MFP into an MFP per Part B billing unit. CMS also clarified that it would 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.
  • Final Guidance: CMS finalized the process as proposed.

• 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.
• 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, as outlined in our IPAY 2028 Draft Guidance alert.
• Draft Guidance: CMS did not propose any significant changes in the Draft Guidance to the IPAY 2027 timeline, but added that it may incorporate drugs selected for renegotiation into its roundtable events. CMS also clarified that the manufacturer may share new information on therapeutic alternatives (i.e., the section 1194(e)(2) data) during any meetings before the initial offer is made. However, new manufacturer-specific data, including research and development costs (i.e., section 1194(e)(1) data), would not be considered during meetings. CMS suggested that manufacturers may still submit supplemental information in connection with meetings after the March 1 deadline in order to contextualize the information previously submitted.
• Final Guidance: CMS shortened the negotiation meeting period for IPAY 2028, such that manufacturers will have only six weeks, compared to two months for previous years, between CMS’s rejection of the manufacturer’s statutory written counteroffer and the deadline for negotiation meetings to conclude. CMS is requiring all negotiation meetings to end by September 11, 2026, so CMS can send final offers to manufacturers by September 30, allowing manufacturers until October 31, 2026, to accept or reject the final offer.

• In general.
  • IPAY 2026 and 2027 Final Guidance: 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 proposed to extend 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.
  • Final Guidance: CMS finalized the Draft Guidance regarding MFP effectuation largely as proposed. CMS repeated its intention to “provide detailed policy on providing access to the MFP for selected drugs payable under Part B in the future and will consider comments and recommendations related to MFP effectuation for drugs payable under Part B in CMS’ policy development.”
• Role of the Medicare Transaction Facilitator (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.
  • Draft Guidance: 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 indicated it 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; however, CMS did not provide detailed policies on the role of the MTF for selected drugs payable under Part B. CMS solicited comments regarding MFP effectuation for drugs payable under Part B.
  • Final Guidance: CMS finalized the Draft Guidance without providing details on the MTF with respect to Part B, and the role of the MTF beyond 2028 is uncertain. CMS plans to continue to support MTF operations through (at least) 2028 and noted the possibility that the MTF could be expanded to support MFP effectuation for drugs payable under Part B beginning with IPAY 2028. However, CMS intends to “monitor potential private sector alternative solutions for sharing verified data or for routing MFP refund payments from manufacturers to dispensing entities.” CMS again indicated that it will provide more information in the future regarding the intended use of the MTF to facilitate payment and data exchange for selected 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 PM 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.
  • Final Guidance: No significant changes. CMS intends to provide detailed policy on MFP effectuation for Part B drugs in the future.
• 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 would have to register with the MTF DM by April 1 of the calendar year before the MFP would go into effect. Manufacturers would be required to sign user agreements to participate in the MTF. Manufacturers that elect to participate in the MTF PM would 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 DPNP 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.
  • Final Guidance: No significant change.
• 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: CMS did not propose any significant changes in the Draft Guidance. 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 would be required to sign an MTF DM user agreement with CMS during the enrollment process. Dispensing entities would also have to provide information during the MTF DM enrollment process that would allow for payment through the MTF PM or outside of the MTF PM.
  • Final Guidance: CMS finalized the Draft Guidance as proposed, but outlined the process for effectuating MFP refund payments if a dispensing entity has not enrolled in the MTF DM. Despite the requirement that dispensing entities participate in the MTF DM, CMS acknowledged based on comments and stakeholder feedback that there may be instances in which an MFP refund payment is necessary for a claim from a dispensing entity that has not enrolled in the MTF DM. In these instances, manufacturers participating in the MTF PM may optionally utilize the MTF PM to pass through MFP refund payments to dispensing entities that have not enrolled in the MTF DM. Alternatively, manufacturers may transmit payment to the dispensing entity outside of the MTF PM and transmit claim-level payment elements to the MTF PM consistent with CMS guidance.
• Data requirements.
  • IPAY 2027 Final Guidance: CMS adopted a list of required data elements to be exchanged between the manufacturer and the MTF DM. 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.
  • Draft Guidance: CMS proposed to include new claim-level data elements. New data elements that manufacturers would receive from the MTF DM include information about the previously paid MFP refund (if any), if an adjustment to a previously addressed claim is made, and dispensing entities’ preference for electronic or paper payment (if specified). CMS also proposed to modify 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.
  • Final Guidance: CMS finalized the Draft Guidance largely as proposed. CMS updated the “Transaction Code” data element to include an indication of the dispensing entity’s MTF DM enrollment status.
• The 14-day MFP prompt payment window.
  • IPAY 2027 Final Guidance: The 14-day prompt MFP 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. 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 would handle and process specific claim edits in the Drug Data Processing System (DDPS) for Part D claims. DDPS data validation edits related to MFP-eligibility would have to 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 would maintain a list of DDPS edits that are related to the determination and verification of MFP eligibility and would wait and monitor for resolution of those edits before sending any claims through the MTF-DM to the manufacturer, relying on existing procedures for doing so. If the edits are not resolved within 90 days, the MTF-DM would notify the dispensing entity that no refund has been paid. CMS also requested comment on how data flow for Part B claims may differ from what was outlined for Part D claims in the IPAY 2027 Guidance.
  • Final Guidance: CMS provided additional detail on the role of manufacturers where DDPS edits are not resolved, but did not finalize any policies for Part B claims. CMS clarified that where DDPS edits are not resolved within 90 days of the rejection by the MTF DM and:
    • A manufacturer participates in the MTF PM, CMS will notify dispensing entities that no refund payment has been paid for the claim through a remittance.
    • A manufacturer does not participate in the MTF PM, the MTF DM will transmit the claims data elements to the manufacturer, but the 14-day prompt payment window will not be triggered.

CMS clarified that the manufacturer may notify the dispensing entity that no payment was made but is not obligated to. The list of DDPS edits related to the determination and verification of MFP eligibility for Part D claims is substantively unchanged.

• 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. 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 proposed that the MTF DM would issue a receipt file to manufacturers participating in the MTF PM, which would notify manufacturers of receipt and processing of claim-level payment elements by the MTF DM and successful MFP refund status.
    • CMS proposed to revise some of the claim-level data elements and clarified that “[i]f the Primary Manufacturer is unable to transmit the claim-level payment elements,” for example due to technical issues, 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 maintain documentation of such good faith effort.
    • CMS also stated it would “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.
  • Final Guidance: CMS finalized its proposals, and provided further detail on how it will make case-specific determinations as to whether a Primary Manufacturer provided access to the MFP and the impact of a dispute on the obligation to make the MFP available.
    • When CMS makes case-specific determinations as to whether a Primary Manufacturer provided access to the MFP, it will consider contextual information available to the agency including the dispensing entity’s invoice amount, documentation maintained by the Primary Manufacturer supporting its refund amount, the refund amount paid, documentation regarding the dispensing entity’s actual acquisition costs, and commercial reasonableness of costs incurred by the dispensing entity related to procurement of the selected drug.
    • In the absence of available information indicating otherwise, CMS will consider WAC to be an appropriate proxy for the dispensing entity’s acquisition cost, such that provision of the Standard Default Refund Amount will be treated as satisfying the Primary Manufacturer’s obligation to make the MFP available.
• Manufacturer MFP effectuation plans.
  • IPAY 2027 Final Guidance: CMS moved up the plan submission deadline to four months before the start of the IPAY 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 proposed to 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 would 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 would 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.
  • Final Guidance: No significant changes.
• 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: CMS did not propose significant changes to the disputes process in the Draft Guidance. CMS solicited 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.
  • Final Guidance: CMS provided additional information about the operational steps it will take after a complaint or dispute is submitted. CMS added details regarding its initial review triage and prioritization process. CMS did not alter the two-track system or timelines for submitting complaints and disputes. CMS also noted that the initiation of a dispute does not alter a manufacturer’s obligations to make the MFP available to the dispensing entity or to transmit claim-level payment elements within the 14-day prompt payment window for an MFP-eligible claim subject to a dispute.

• Deduplication guidance.
  • 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: CMS did not propose any significant changes, but clarified that the manufacturer's MFP effectuation plan would have to 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 would “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 into the MFP validation procedures.
  • Final Guidance: No significant changes. CMS clarified that information about a manufacturer's nonduplication process will be collected solely for use by CMS and will not be made public. CMS declined to establish a clearinghouse to collect data for 340B claims but noted it will continue to explore the feasibility of incorporating 340B transactional data into the MTF process. CMS acknowledged that the Health Resources and Services Administration (HRSA) recently announced the “340B Rebate Model Pilot Program as a voluntary mechanism for qualifying drug manufacturers to effectuate the 340B ceiling price on select drugs to all covered entities,” but noted that the program “is outside of the scope of this final guidance.” Hogan Lovells published a client alert on the HRSA Rebate Model Pilot Program, available here.

• Identification of drugs for renegotiation.
  • Draft Guidance: Consistent with the statute, CMS proposed 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 proposed 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 proposed to collect voluntary submissions from manufacturers and use publicly available information from the Drugs@FDA and Center for Biologics Evaluation and Research databases.
    • CMS proposed 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 would 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 would 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.
  • Final Guidance: CMS finalized the above proposals and further clarified the period for which information supporting renegotiation eligibility will be considered, the due dates for submission of such information, and the removal of drugs eligible for renegotiation.
    • CMS clarified that for drugs that seek to be renegotiation-eligible due to a newly added indication, the new indication must be added to the FDA-approved labeling for the selected drug on or before November 30, 2025.
    • CMS stated that if it determines bona fide marketing of a generic or biosimilar exists prior to the publication of the renegotiation selected drug list (e.g., February 1, 2026), the drug will no longer be eligible for renegotiation.
• Timing of selection for renegotiation.
  • Draft Guidance: CMS proposed that renegotiation eligibility and selection analysis would, 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 would be the same as for drugs otherwise selected for negotiation for IPAY 2028.
  • Final Guidance: No significant changes. CMS intends to publish the list of drugs selected for renegotiation no later than February 1, 2026 (the date of publication of the list of drugs selected for negotiation for IPAY 2028).
• Process of renegotiation.
  • Draft Guidance: CMS proposed 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).
  • Final Guidance: No significant changes.

• 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 proposed that starting with IPAY 2028, manufacturers would provide access to the MFP with respect to MFP-eligible individuals under Parts B, C, and D.
  • Final Guidance: No significant changes. CMS will address policies related to the operation of the MFP for drugs payable under Part B to Part B providers in the future.
• 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 added 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.”
  • Final Guidance: No substantive changes.
• 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 determined that Part D sponsors were 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 was monitoring trends in formulary placement and had not seen plan sponsors steer Part D beneficiaries from selected drugs to non-selected drugs.
  • Final Guidance: No significant changes. CMS elaborated that, “[i]n light of the substantial time required for CMS to complete the formulary review process and analyze the impacts of the formulary inclusion requirement,” it could not yet determine whether changes to formulary inclusion policies were warranted.
• 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.
  • Final Guidance: No significant changes.