SMART Prices Act
The SMART Prices Act would amend Medicare’s drug price negotiation program to make the program larger, faster, and more aggressive in reducing drug costs. Key changes include accelerating the rate at which drugs become eligible for negotiation (moving from a plan that would cover 15 drugs in 2028 to 50 drugs in 2028 or later), shortening the time a drug can enjoy exclusive protection before it becomes eligible for negotiation (reducing certain single-source protection from 7 and 11 years to 3 years), and revising how the “maximum fair price” ceiling is calculated (adjusting three percentage components). The amendments would apply to initial price applicability beginning in 2028, aligning the new approach with future pricing cycles rather than previous timetables. In short, the bill aims to broaden and speed up Medicare’s power to set lower negotiated prices for more drugs, while also easing some protections that delay price negotiation for brand-name drugs. The overall effect could be lower prices for many drugs covered by Medicare, but may also affect brand manufacturers’ market protections and profitability.
Key Points
- 1Accelerated drug negotiation expansion: The number of negotiation-eligible drugs increases to 50 in 2028 or a subsequent year, up from 15, speeding broader price negotiation under Medicare.
- 2Elimination of an old provision: The bill removes a prior paragraph (paragraph (4)) from the section governing negotiation-eligible drugs, simplifying or accelerating the process.
- 3Shorter single-source exclusivity: The definition of a qualifying single-source drug is tightened, with the relevant exclusivity periods reduced from 7 years to 3 years and from 11 years to 3 years, potentially allowing earlier entry of generics or alternative pricing considerations.
- 4Revised maximum fair price ceilings: The three components used to calculate the maximum price Medicare would pay are adjusted—76% (up from 75%), 55% (down from 65%), and 30% (down from 40%)—which can alter the final negotiated price depending on how these factors combine for a given drug.
- 5Effective date: These changes apply to initial price applicability years beginning in 2028, shaping pricing cycles starting then.