Dear Administrator Oz:

Thank you for the opportunity to provide comment on the Centers for Medicare & Medicaid Services’ (CMS) proposed rule concerning the Medicare Drug Price Negotiation Program and Medicare Prescription Drug Benefit Program (CMS–4215–P). As the Director of Health Care Policy at the American Action Forum, I support policies that increase access to innovative medicines for patients. Policies that promote such access are largely underpinned by free market principles and competition-based economics.

Overseeing the Medicare and Medicaid programs is the chief charge of CMS. It requires extensive strategic planning, policy forecasting, and understanding of fundamental principles, not just in medical care but also economics. Laws and regulations that constrain or ignore these economics worsen not only the medical outlook for patients that rely on these health care programs, but the fiscal outlook as well. The Inflation Reduction Act (IRA) and the Medicare Drug Price Negotiation Program (MDPNP) inherently constrain these economics; while repeal would be a significantly difficult step to take, the Medicare drug negotiation program – the worst of the health care pieces of this legislation – should be constrained and not expanded as suggested in parts of this proposed rule.

CMS describes the proposed rule as an effort to establish a durable regulatory framework for the MDPNP beginning with initial price applicability year 2029, as required by law. This codification does not, however, require CMS to convert every choice contained in prior guidance into permanent regulation. Nor should it be an occasion to expand the program through new policies that are not clearly required by the statutory text.

CMS should therefore take the lightest touch approach possible. The final rule should codify only those definitions, deadlines, calculations, and procedures that are expressly required by the IRA or indispensable to meeting an explicit statutory obligation. Interpretive choices that are not necessary to administer the statute should remain outside the final rule, while genuinely new substantive policies should be withdrawn and – if CMS believes they remain necessary after further experience – considered through future congressional outreach.

This restraint is especially important because the MDPNP remains new. Although several years of forced “negotiations” have taken place, maximum fair prices (MFPs) first took effect in 2026, and complete Part D data for this year are not yet available. Even after those data become available, it may not be possible to distinguish the effects of individual MDPNP policies from the effects of the IRA’s broader redesign of the Part D benefit. The agency should not permanently embed or expand discretionary policies before it can reasonably evaluate how the program’s existing rules have operated.

I recommend that CMS:

1. Finalize only the statutory and administrative provisions necessary to operate the Medicare drug negotiation program after 2028;
2. Withdraw proposed § 429.125(b)(4)(i) and its conforming provisions concerning product identification, approval and licensure dates, expenditure aggregation, application of the MFP, and deselection;
3. Exclude off-label uses from the determination of whether a new indication has been added for purposes of renegotiation eligibility;
4. Decline to codify a fixed value of 12 30-day equivalent supplies for therapies that are typically administered one time;
5. Limit proposed § 429.125(c)(3) to the requirements clearly established by the statute;
6. Replace open-ended standards governing bona fide marketing and transfers of manufacturer responsibility with objective, timely, and ministerial procedures;
7. Implement the Temporary Floor for Small Biotech Drugs automatically whenever CMS possesses the information necessary to determine eligibility; and
8. Revise proposed § 429.210(b) so that guidance cannot create or amend binding obligations under the Negotiation Program Agreement.

CMS Should Finalize a Minimal Regulatory Framework

Congress directed CMS to implement the MDPNP for initial price applicability years 2026, 2027, and 2028 through program instruction or other forms of guidance. CMS accordingly issued annual guidance establishing the program’s operative policies for those years.

The end of the guidance-based program instruction period does not mean that every provision of the prior guidance should be codified. Congress prescribed the central architecture of the program, including the number of drugs to be selected, the eligibility periods following approval or licensure, the applicable ceiling prices, the negotiation factors, and the deadlines governing the negotiation process. CMS can codify the rules necessary to carry out those instructions. But where the statute leaves an issue unaddressed, CMS should not assume that the most expansive interpretation is the most appropriate policy.

While certainty in federal policymaking is always appreciated, creating certainty where there isn’t data to support it can complicate future policymaking. Codifying an express statutory requirement provides manufacturers and other stakeholders with needed certainty about the administration of the program. Codifying a discretionary methodology or interpretive judgment makes that choice more difficult to revise after CMS gains additional experience. Adding a new substantive policy may change which products are selected, how quickly they become eligible, or the price applied to them.

CMS should therefore distinguish three categories of provisions. First, CMS should finalize provisions that closely track explicit statutory requirements. These include basic program definitions, publication dates, negotiation deadlines, statutory ceiling calculations, confidentiality requirements, and the obligation to make an agreed-upon MFP available. Second, CMS should narrow provisions that are administratively necessary but extend beyond the statutory text. Such provisions should rely on objective criteria, limit agency discretion, establish definite timelines, and provide a meaningful process for correcting factual errors. Third, CMS should withdraw provisions that create new substantive policies or materially expand the reach of the MDPNP without a clear statutory command. Proposed § 429.125(b)(4)(i), the treatment of off-label uses as potential new indications, and the fixed calculation for one-time therapies fall principally within this third category.

A restrained final rule would not prevent CMS from addressing a demonstrated implementation problem in the future. It would simply require the agency to identify the problem, assess its effects, evaluate alternatives, and seek public comment before imposing a durable new requirement.

Furthermore, the limitations on administrative and judicial review heighten the need for restraint. The IRA restricted administrative and judicial review of several consequential determinations, including the selection of drugs, the identification of negotiation-eligible and qualifying single source drugs, the determination of a MFP, and certain renegotiation decisions. These limitations make objective regulatory standards especially important. A product-identification decision under proposed § 429.125, for example, may determine whether multiple products are treated as one qualifying single source drug, the date from which the eligibility period is measured, the expenditures attributed to the drug, and the products to which an eventual MFP applies. If the affected manufacturer has no meaningful ability to obtain review of that determination, CMS should avoid standards that depend on open-ended or novel agency judgments.

While a minimalistic regulatory approach would omit the newly proposed policies writ large, I provide perspective below on their individual exclusions from the rule.

CMS Should Withdraw Proposed § 429.125(b)(4)(i) on Fixed-combination Products

Proposed § 429.125(b)(4)(i) represents the most consequential new expansion in the rule. Under CMS’s general policy, a fixed-combination product is identified based on its distinct combination of active moieties, active ingredients, or antigen components. A product containing only one component of that combination is generally treated as a separate potential qualifying single source drug.

The proposed exception would depart from this policy when a fixed-combination product shares one or more active moieties or active ingredients with another product held by the same new drug application (NDA) or biologics license application (BLA) holder and includes an additional component that creates a new formulation and enables an alternative route of administration for the shared component. In that circumstance, CMS would aggregate the products containing the shared component for purposes of identifying the qualifying single source drug. It would also use the earliest approval or licensure date associated with the shared component when applying the seven- or 11-year eligibility period.

CMS should not finalize this proposal. Further discussion on this proposed section is below.

The statutory aggregation provisions do not clearly authorize CMS to redefine separate products as the same drug.

CMS’ outlined selection criteria are found primarily in sections 1192(d)(3)(B) and 1196(a)(2) of the Social Security Act. Section 1192(d)(3)(B) requires CMS, when applying specified expenditure criteria, to aggregate data across dosage forms and strengths of “the drug,” including new formulations such as an extended-release formulation. Section 1196(a)(2) directs CMS to apply the MFP across the dosage forms and strengths of a selected drug.

These provisions direct CMS on how to treat different dosage forms, strengths, and formulations after the relevant drug has been identified. They do not clearly provide cover to affirmatively address whether two products with different combinations of active ingredients constitute the same “drug” in the first place.

The structure of section 1192(d)(3)(B) reinforces this distinction. The provision concerns the data that CMS must use “[i]n determining whether a qualifying single source drug satisfies” expenditure criteria. It presupposes that CMS has already identified the qualifying single source drug whose dosage forms, strengths, and new formulations will be aggregated. It should not be read as an independent grant of authority to disregard a separately approved combination of active ingredients and redefine it as the same product as a drug containing only one of those ingredients.

The statutory example is also informative. Congress referred to an extended-release formulation, a product that ordinarily contains the same active moiety in a different release configuration. Proposed § 429.125(b)(4)(i), by contrast, reaches products that contain an additional active moiety or active ingredient and that may be approved or licensed as a distinct product. Thus, CMS’ proposal moves beyond aggregating different formulations of the same drug and toward treating different drug combinations as the same drug.

The fact that two products share an active ingredient does not by itself make them the same qualifying single source drug. Under CMS’ general fixed-combination policy – and in the eyes of the Food and Drug Administration (FDA) – a corticosteroid inhaler and an inhaler containing that corticosteroid together with another active ingredient would remain separate products. CMS should retain that administrable and conceptually consistent rule.

The proposal could truncate the statutory eligibility period for a separately approved product.

The statute generally requires that at least seven years have elapsed since approval of a drug or eleven years since licensure of a biological product before the product may qualify for selection. Proposed § 429.125(b)(4)(i), together with proposed § 429.125(c), would measure that period using the earliest approval or licensure associated with the shared active ingredient, not the approval or licensure of the separately developed combination product.

The result may be to subject a newly approved or licensed product to negotiation before seven or eleven years have elapsed from that product’s own approval or licensure. A manufacturer that develops a new formulation, conducts the necessary clinical and manufacturing work, obtains separate FDA approval or licensure, and introduces a different route of administration could find that the product is treated as though it entered the market years earlier.

Congress could have directed CMS to measure the eligibility period from the first approval or licensure of any product sharing an active ingredient with a later combination product. It did not do so. The final rule should not effectively shorten a statutory eligibility period through an administrative product-aggregation policy.

The proposed criteria are not sufficiently objective.

CMS maintains that the proposed standard can be applied consistently “using public sources such as RxNorm, OpenFDA, FDALabel, DailyMed,” and FDA active-ingredient data. While those sources may identify the ingredients within a product, they may not resolve the more consequential questions presented by the rule: whether the added ingredient “creates a new formulation,” whether it “enables” an alternative route of administration, and whether the resulting product should be treated as a formulation of an earlier product rather than a separately developed drug or biological product.

Those questions may require scientific, regulatory, and product-specific judgments; these are all conveniently housed at the FDA, which has the statutory responsibility to adjudicate those questions. CMS itself previously declined to revise the fixed-combination policy through guidance because commenters raised concerns about statutory authority, consistency with FDA’s treatment of combination products, administrability, and effects on innovation. The revised terminology does not eliminate those underlying concerns.

Nor does the proposed rule establish a sufficiently robust process for manufacturers to contest CMS’s determination before selection. Because qualifying-single-source-drug determinations are generally insulated from administrative and judicial review, the possibility of inconsistent application is not a minor procedural concern.

Alternative routes of administration can provide meaningful value to patients and the health care system.

CMS frames the proposal principally as a response to a program-integrity risk. That framing risks treating the development of an alternative route of administration as presumptively evasive conduct rather than as a potentially valuable form of medical innovation.

A new route of administration may reduce treatment time, lessen dependence on infusion facilities, permit care in a physician office or home setting, reduce demands on clinical staff, improve adherence, or make treatment more manageable for patients and caregivers. These benefits may arise even when the added ingredient does not independently treat the underlying disease.

The MDPNP should not create a clear and avoidable disincentive to invest in such improvements. The effect would extend beyond the manufacturer of an individual product. Providers and patients increasingly benefit from innovations that reduce the time and infrastructure required to administer complex therapies. A policy that accelerates price regulation for these products may suppress investment precisely where delivery system improvements could expand capacity and improve patient experience.

CMS has not adequately evaluated the proposal’s effects.

CMS identifies the fixed-combination policy as the only one of its seven new policies that may have an economic effect, but it does not quantify that effect. The agency explains that the relevant costs and savings may fall outside the ten-year budget window and that it lacks a credible drug-level forecast. It also acknowledges that aggregation may sometimes reduce, rather than increase, savings: If generic or biosimilar competition begins for one dosage form or strength, the larger aggregated drug may be deselected, ending application of the MFP to the other aggregated products.

The agency’s inability to quantify the proposal does not establish that its effects are negligible. It demonstrates that CMS lacks an adequate basis to conclude that the proposal will improve the program without producing material unintended consequences.

CMS should retain the fixed-combination policy used for initial price applicability years 2026–2028 while it gathers additional evidence. The agency may revisit the issue through a separate proposed rule if actual experience demonstrates a defined and material circumvention problem.

At minimum, CMS should narrow the proposal substantially.

If CMS nevertheless finalizes some version of § 429.125(b)(4)(i), it should:

• Limit the policy to the specific category of biological products that CMS has identified as presenting a current program-integrity concern;
• Require a determination, made in consultation with FDA, that the additional ingredient has no independent therapeutic role in the product;
• Preserve the actual approval or licensure date of the combination product for purposes of the seven- or 11-year eligibility period;
• Apply the policy only to products approved or licensed after the effective date of the final rule;
• Provide the affected manufacturer with notice of the proposed aggregation and the evidence supporting it before the selected drug publication date;
• Establish a meaningful reconsideration and appeal process;
• Publish a product-specific explanation of each aggregation decision; and
• Require CMS to reassess the policy after it obtains several years of Part B selection and negotiation experience.

These protections would not cure the underlying statutory concern, but they would reduce the proposal’s potential to sweep in products that represent legitimate and independently valuable innovation.

CMS Should Narrow or Withdraw Other New Policies

Certain former orphan drugs: proposed § 429.125(c)(3)

Recent statutory amendments require CMS, for certain products that initially qualified for the orphan drug exclusion, to measure the seven- or 11-year period from the first day after initial approval or licensure on which the product ceased to satisfy the exclusion.

CMS proposes that the clock begins when the FDA approves a non-orphan indication (even if that indication is later withdrawn). This approach could create a situation in which a product again satisfies the orphan drug exclusion but continues moving toward negotiation eligibility based on an indication that is no longer approved. (Note, however, that CMS is not aware of a current product presenting that scenario and considers the likelihood of it occurring to be low.)

Where the agency has identified no present implementation problem, it should not codify an interpretation that produces a recognized anomaly. CMS should adhere closely to the statutory language and defer this question until it arises in an actual case or can be considered with a more developed record. At minimum, CMS should clarify that a withdrawn non-orphan indication will not cause a product that otherwise satisfies the orphan drug exclusion to be selected unless the statute unmistakably requires that result.

Bona fide marketing: proposed §§ 429.125(d), 429.130, and 429.135

CMS proposes to determine bona fide marketing through a holistic examination of utilization, sales, availability, market share, licensing arrangements, and other public and proprietary information. CMS would conduct the inquiry on recurring schedules, including monthly reviews during portions of the negotiation and renegotiation periods.

CMS is correct that an approval or licensure accompanied only by token availability should not necessarily be treated as meaningful market entry. But an open-ended inquiry creates uncertainty for both reference-product manufacturers and generic or biosimilar competitors. It may also delay recognition of competition after a competitor has launched and begun supplying the market.

A product should not remain subject to negotiation merely because its competitor has not yet achieved substantial market share. Congress required that the generic or biosimilar be “marketed,” not that it captures a particular percentage of the market. The final rule should establish objective safe harbors. For example, CMS should presume bona fide marketing when an approved generic or licensed biosimilar is commercially available through ordinary distribution channels and has generated verified sales or Medicare utilization. CMS can identify the evidence necessary to rebut that presumption, publish firm decision deadlines, and provide notice to affected manufacturers.

Transfers and novations: proposed § 429.210(c)

CMS proposes that the existing primary manufacturer remain responsible for the Negotiation Program Agreement until all relevant NDAs or BLAs are transferred to an acquiring entity and that entity assumes responsibility through a novation approved by CMS. The proposed novation must be submitted for review at least 30 calendar days before the intended transfer.

CMS should ensure continuity of responsibility for making the MFP available, but it should not create unnecessary uncertainty for ordinary commercial transactions. The final rule should treat a complete and properly documented novation as a mere administrative matter. CMS should be required to approve or identify deficiencies within a definite period, and the novation should be deemed approved if CMS does not act by the intended transfer date.

The transferring manufacturer should remain responsible only for obligations arising before the effective transfer, except to the extent the parties expressly agree otherwise. CMS should not use the novation process to impose successor or residual liability beyond that required by the statute.

One-time therapies: proposed § 429.415(a)(2)

CMS proposes to assign a value of 12 30-day equivalent supplies to drugs that are typically administered one time, including some vaccines, cancer therapies, and potentially other long-duration treatments. CMS explains that a value must be assigned because there ordinarily will not be a subsequent claim from which to calculate the number of days between services.

The proposed value is administratively convenient, but it does not necessarily reflect the clinical or economic characteristics of a one-time therapy. A product administered once may provide benefit for weeks, years, or potentially a patient’s lifetime. Treating each such therapy as equivalent to 12 30-day supplies imposes a uniform convention on products with fundamentally different treatment patterns.

CMS should not codify the value of 12. A price-per-administration methodology would more faithfully reflect the utilization of a product administered once. Alternatively, CMS could establish a product-specific methodology based on the FDA-approved dosing regimen, expected treatment course, duration of clinical benefit, and relevant therapeutic alternatives. CMS already proposes retaining authority to use tailored methodologies for some therapeutic alternatives when the standard 30-day calculation does not produce a meaningful comparison. It should provide at least the same flexibility for the selected drug itself.

Temporary Floor for Small Biotech Drugs: proposed § 429.440

The temporary floor is established by statute for qualifying small biotech drugs in initial price applicability years 2029 and 2030. CMS proposes that the primary manufacturer apply to receive the floor as a prerequisite, along with providing supporting information.

Instead, CMS should apply the floor automatically whenever the agency already possesses the Medicare expenditure and manufacturer information necessary to determine eligibility. A statutory protection should not be forfeited because a manufacturer fails to duplicate information that is already held by CMS. Where additional documentation is genuinely necessary, the request for information should be short, standardized, and subject to a reasonable correction period. CMS should provide its eligibility determination and calculations to the manufacturer before the negotiation process begins.

Off-label uses and renegotiation: proposed §§ 429.605 and 429.610

CMS proposes that an off-label use voluntarily submitted by a primary manufacturer may be considered a “new indication” for purposes of determining renegotiation eligibility. CMS concedes that consideration of off-label use is discretionary and “not explicitly mandated” by section 1194(f)(2)(A). The agency also recognizes that there is no single reliable source for identifying off-label uses.

CMS should not finalize this policy. The statutory phrase “a new indication is added to the drug” is most naturally understood to refer to an indication added through FDA approval and reflected in the approved labeling. An off-label use is not formally added to the drug by the manufacturer or FDA. The proposal would create a counterproductive information sharing incentive. CMS describes the manufacturer’s submission as voluntary and suggests that the information could improve its understanding of the product. But the submission itself could expose the product to renegotiation. Manufacturers would therefore have a reason not to provide CMS with information that might otherwise improve the agency’s clinical assessment.

CMS may consider reliable evidence concerning off-label use when evaluating a product’s clinical benefits, therapeutic alternatives, unmet medical need, or other factors during initial negotiations. It should not treat the off-label use as an independent new indication triggering renegotiation eligibility.

Guidance Should Not Create or Amend Binding Obligations

Proposed § 429.210(b) would permit CMS to amend the Negotiation Program Agreement to reflect changes in law, regulations, or guidance. CMS would provide at least 60 days’ notice only “when possible.”

This provision would undermine the principal benefit of codification. If CMS can alter binding agreement terms through guidance, manufacturers may remain subject to substantive changes without notice-and-comment rulemaking even after the agency establishes a detailed regulatory framework.

The final rule should remove “guidance” as an independent basis for amending the Negotiation Program Agreement. CMS may issue guidance explaining its interpretation of existing legal and regulatory requirements, but guidance should not create new duties, submission requirements, liabilities, pricing methodologies, or conditions of participation.

The final rule should also require that:

• Substantive changes to the Negotiation Program Agreement be made through notice-and-comment rulemaking unless directly compelled by a statutory amendment;
• Changes operate prospectively, not retroactively;
• Manufacturers receive at least 90 days’ notice of operational changes, except where a statute requires earlier implementation; and
• CMS clearly identify whether each future document is binding regulation, contractual language, or nonbinding guidance.

Codification should result in greater stability and predictability. It should not give CMS a regulatory foundation while preserving unrestricted authority to alter that foundation through subregulatory policy.

CMS Should Reassess Its Published Regulatory Impact of the New Policies

CMS characterizes six of the seven new policies as technical changes that would produce no additional costs or savings. It identifies only the fixed-combination policy as potentially having an economic effect, while acknowledging that it cannot accurately estimate that effect.

Several of the other policies are not merely technical. Treating an off-label use as a potential new indication may affect manufacturer research, evidence generation, and information sharing. The methodology for one-time therapies may materially affect the starting point for negotiations. Novation requirements may affect transactions involving selected drugs. Bona fide marketing standards determine whether products remain subject to negotiation after generic or biosimilar entry. Application requirements may determine whether a manufacturer receives a statutory small-biotech floor.

CMS should evaluate these effects rather than assume them away. The final regulatory impact analysis should consider:

• Investment in alternative formulations and routes of administration;
• Effects on site of care, provider capacity, and patient treatment burden;
• Research and evidence generation concerning off-label uses;
• Transaction and compliance costs associated with transfers and novations;
• Delays in recognizing bona fide generic or biosimilar competition;
• The effects of standardized calculations on one-time and long-duration therapies;
• Burdens on small and emerging biotechnology companies; and
• The alternative pathway of finalizing only statutory and ministerial provisions.

CMS’ own account of the MDPNP’s early implementation supports caution. The agency states that complete 2026 data are not yet available and that the effects of negotiation may be difficult to separate from other changes to Medicare Part D. That is a reason to preserve flexibility – not to permanently codify every existing policy and add new ones.

Conclusion

CMS should align the proposed rule with statutory requirements for the Medicare Drug Price Negotiation Program without unnecessarily expanding it. The best course is to finalize a narrow framework that closely follows the statute and establishes clear, objective procedures for initial price applicability year 2029 and subsequent years. The end of the temporary guidance period should mark a transition toward greater procedural discipline, transparency, and stability. It should not become a basis for converting discretionary implementation choices into permanent requirements or extending the MDPNP beyond the boundaries established by Congress.

CMS should withdraw proposed regulations around changing fixed-combination therapies, exclude off-label uses as independent renegotiation triggers, decline to codify the fixed one-time-therapy calculation, and substantially narrow the remaining new policies. It should also ensure that future guidance cannot create binding obligations or amend the substance of the Negotiation Program Agreement.