Expanded exemptions for orphan drugs could mean prolonged protections for top-selling drugs like Merck’s Keytruda, which was initially approved under this designation in 2014.
The U.S. Centers for Medicare and Medicaid Services has released finalized guidelines for the Inflation Reduction Act’s drug price negotiation program, cementing broader exclusions from the negotiations for orphan drugs.
According to experts, however, doing so could end up keeping expensive drugs away from price negotiations, delaying savings that could have been generated earlier, Endpoints News reported on Thursday.
The current iteration of the IRA only exempts orphan drugs from negotiations if they have only one rare disease approval, a stipulation that some experts worry could disincentivize companies from going after other indications.
Under President Donald Trump’s recent tax and spending package, the exclusion now blocks off negotiations even if these medicines win a second orphan indication. Instead, the countdown for when a drug qualifies for Medicare negotiations starts only upon approval for a non-rare disease.
Such broader protections, according to Harvard healthy policy researcher Benjamin Rome, could extend to expensive and widely used treatments, leading the government to miss out on billions in savings, as per the Thursday Endpoints report.
Under the new IRA rules, Rome said, Keytruda’s countdown would start only in 2015, when it was greenlit for non-small cell lung cancer, potentially prolonging its protection from negotiations by a year. Other top-selling drugs, such as Bristol Myers Squibb’s Opdivo, could benefit in a similar way. “Even a one-year delay in negotiating the prices for those drugs will be extraordinarily consequential,” Rome told Endpoints.
The IRA’s drug price negotiation program is currently in its second cycle. On Jan. 17—former President Joe Biden’s final Friday in office—the CMS named the 15 products that would be subject to negotiations, a list that included Novo Nordisk’s blockbuster weight-loss drug Ozempic, as well as its sister brand Rybelsus.
As per a CMS fact sheet at the time, the agency should have submitted its initial offer of a maximum fair price for these 15 products by June 1, with negotiation meetings set to end by Sept. 30 at the latest. It is not clear if these deadlines have been met. The final price offer is due on Oct. 15, with the final agreed-upon prices to be published on or before Nov. 30. These second-cycle prices will take effect on Jan. 1, 2027.
CMS is also gearing up to launch the third cycle of the pricing program, with the agency announcing in March this year that it will name the next 15 drugs up for negotiation on Feb 1, 2026.
