On May 12, 2023, the Centers for Medicare & Medicaid Services (CMS) issued Draft Guidance on the Part D Manufacturer Discount Program (“Discount Program”)—a key component of the Part D Redesign provisions of the Inflation Reduction Act (IRA).

Starting on January 1, 2025, unless certain exceptions apply, Part D coverage of “Applicable Drugs”1 will only be available for Applicable Drugs of manufacturers that participate in the Discount Program through an agreement with CMS.

The Discount Program would make manufacturer discounts available in both the initial coverage and catastrophic phases of the Part D benefit once a beneficiary exceeds the annual deductible, as summarized below:

Key Considerations

  • Using Part B and D claims data and manufacturer-submitted ownership information, CMS will identify manufacturers qualified to pay phased-in discount amounts for certain Applicable Drugs dispensed to Low Income Subsidy beneficiaries or made by small manufacturers.
  • Unlike the Coverage Gap Discount Program that sunsets in 2025, the new Discount Program discounts will not count toward an enrollee’s incurred costs and will be available regardless of whether an enrollee is entitled to an income-related subsidy.
  • CMS previously issued an Information Collection Request addressing information needed for manufacturers’ agreements with CMS under the new Discount Program. CMS plans to issue the revised information in late 2023 in addition to other guidance.

Next Steps for Stakeholders

Related Documents

Date of Issuance: May 12, 2023

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