Comments on the Small Biotech Exception Information Collection Request Form Are Due by March 27, 2023
This Insight will be one of a series of Insights that Epstein Becker Green is preparing pertaining to the implementation by the Centers for Medicare & Medicaid Services (“CMS”) of the Medicare Drug Price Negotiation Program.
On January 23, 2023, CMS published in the Federal Register its first proposed rulemaking to implement the Medicare Drug Price Negotiation Program (the “Negotiation Program”), which is included in the Inflation Reduction Act of 2022. The topic of the proposed rulemaking is the Small Biotech Exception Information Collection Request Form, pursuant to the Paperwork Reduction Act requirements.
By way of background, pursuant to the Inflation Reduction Act, under the new Negotiation Program, CMS will have the authority to negotiate prices of certain “negotiation-eligible drugs” whose prices will go into effect for negotiated Part D drugs beginning in 2026 and for Part B drugs in 2028. Despite CMS’s initial focus on Part D drugs, manufacturers of Part B drugs would be advised to pay attention and submit comments throughout the series of these rulemakings because it is likely that CMS will rely upon what it creates for Part D drugs when it is ready to implement the Part B drug provisions in future years.
Under the Negotiation Program, there are certain exceptions to “negotiation-eligible drugs,” including one for “small biotech drugs” (the “Small Biotech Exception”) that is available for the 2026, 2027, and 2028 price applicability periods.[1] A small biotech drug is described as one representing (i) less than 1 percent of total expenditures for drugs under Medicare Part D (and eventually Part B), and (ii) 80 percent or more of the Medicare program expenditures for the manufacturer. Manufacturers of covered Part D drugs seeking to qualify for this Small Biotech Exception must submit a proposed form to CMS before the agency establishes the selected drug list for the initial price applicability year 2026 (consistent with further direction forthcoming from CMS).
The purpose of this rulemaking is to present CMS’s proposed Small Biotech Exception Information Collection Request Form (designated CMS-10844, or OMB 0938-NEW), which can be found on this CMS web page. Consistent with the Paperwork Reduction Act, CMS is providing the public an opportunity to comment on the proposed form.
Manufacturers should pay particular attention to the following quotes from CMS that highlight specific information and legal determinations necessary to CMS’s determination of the manufacturer’s eligibility for the exception:
- “In order to accurately identify, at the request of a manufacturer, whether a given covered Part D drug qualifies for the Small Biotech Exception in accordance with section 1192(d)(2) of the Act, CMS needs to collect information to identify the entity that had a Medicare Coverage Gap Discount Program Agreement under section 1860D-14A1 for the drug as of December 31, 2021, including all other entities that, as of December 31, 2021, were treated as a single employer with that entity under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986. For the purpose of this information collection request, ‘controlled group’ means all corporations or partnerships, proprietorships and other entities treated as a single employer under 26 U.S. Code section 52(a) or (b).”
- “If the Submitting Manufacturer seeks the Small Biotech Exception for a covered Part D drug it acquired after December 31, 2021, the Submitting Manufacturer must also submit information related to the separate entity that had the Medicare Coverage Gap Discount Program agreement for the drug on December 31, 2021.”
Notably, the form must include a certification that the information submitted “is accurate and complete, and was prepared in good faith and after reasonable efforts.” The certifier must be, or be authorized by, the CEO or President of the manufacturer submitting the request. This certification requirement and the level of authority required are similar to those required for manufacturer submissions of drug pricing calculations currently in place under Medicare Part B and the Medicaid Drug Rebate Program.
Manufacturers of all sizes, or other stakeholders impacted by concerns about how the Small Biotech Exception will directly or indirectly impact the selection of drugs for the Negotiation Program, should submit formal comments through www.regulations.gov. As an alternative, with all elements of the Negotiation Program, members of the public are welcome to share feedback and input in writing by email to IRARebateandNegotiation@cms.hhs.gov.
Separately, on January 11, 2023, CMS published a proposed timeline that can be found at this link. The timeline provides a more detailed forecast of when certain actions will be taken by CMS to implement the new Negotiation Program.
On January 23, 2023, CMS also issued a new Medicaid Drug Rebate manufacturer release regarding the impact of the Inflation Reduction Act. We will include more detailed information as to this Medicaid Drug Rebate manufacturer release in future publications.
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This Insight was authored by Lynn Shapiro Snyder, Constance A. Wilkinson, and James S. Tam. For additional information about the issues discussed in this Insight, please contact one of the authors or the Epstein Becker Green Health Care and Life Sciences attorney who regularly handles your legal matters.
Endnote
[1] Inflation Reduction Act of 2022 (Pub. L. 117-169), Section 1192 (d)(2).
