PUBLIC COMMENT LETTER

Docket No. CMS-4208-P | RIN 0938-AV40

TO: Centers for Medicare & Medicaid Services Department of Health and Human Services Attention: CMS-4208-P P.O. Box 8013 Baltimore, MD 21244-8013

RE: Medicare and Medicaid Programs; Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly Docket: CMS-4208-P | RIN: 0938-AV40 Published: 89 Fed. Reg. 99340 (December 10, 2024)

Date: January 27, 2025

Submitted by: Tiber Creek Health Strategies, Inc., on behalf of Eli Lilly and Company

Tiber Creek Health Strategies, Inc., submits these comments on behalf of Eli Lilly and Company ("Lilly") in response to the above-captioned proposed rule published by the Centers for Medicare & Medicaid Services ("CMS") in the Federal Register on December 10, 2024. ^[1]

I. Introduction and Statement of Interest

Eli Lilly and Company is a global research-based pharmaceutical manufacturer with a long-standing and direct stake in the Medicare Part D program, including policies governing drug pricing transparency, negotiated prices, insulin cost-sharing, anti-obesity medication coverage, and the Medicare Drug Price Negotiation Program. Lilly's products—including covered insulin products and agents approved for chronic weight management—are directly affected by multiple provisions of this proposed rule. ^[1]

Tiber Creek Health Strategies, Inc., has represented Lilly in federal legislative and regulatory matters on a continuing basis across multiple reporting periods, as disclosed in filings with the U.S. Senate under the Lobbying Disclosure Act. Reported lobbying expenditures on behalf of Lilly by Tiber Creek Group and affiliated entities include, among others: $80,000 for the first quarter of 2024 ^[16]; $80,000 for the second quarter of 2024 ^[5]; $80,000 for the third quarter of 2024 ^[20]; and $80,000 for the fourth quarter of 2024 ^[4]. These disclosures reflect Lilly's sustained engagement on the precise programmatic areas addressed in this rulemaking. Lilly therefore has well-established standing to submit substantive comments and a direct material interest in CMS's final policy choices.

The corpus of public comments already filed on this rulemaking was not available in the sources reviewed in preparing this submission. Accordingly, these comments do not characterize the broader comment record, which may contain additional arguments not addressed herein.

II. Summary of Position

Lilly strongly supports CMS's stated goals of improving price transparency, promoting informed beneficiary choice, and implementing the Medicare Drug Price Negotiation Program in a manner that benefits Part D enrollees. ^[1] However, Lilly opposes the proposed implementation timeline for negotiated-price requirements as operationally infeasible given the complexity of integrating negotiated prices with existing contractual rebate obligations across the Part D supply chain. Lilly urges CMS to grant a minimum 12-month extension of the effective date for negotiated-price implementation requirements and to issue contemporaneous, binding guidance clarifying how negotiated prices—as defined under 42 C.F.R. § 423.100 and as referenced in the proposed insulin cost-sharing framework—interact with existing rebate structures. Without both an extended timeline and clear regulatory guidance, the proposed rule risks creating conflicting obligations that could harm rather than help the beneficiaries CMS seeks to protect.

III. Specific Comments

Comment 1: The Proposed Negotiated-Price Timeline Is Operationally Infeasible

The proposed rule references negotiated prices—as defined in 42 C.F.R. § 423.100—as a determinative input in multiple cost-sharing calculations, most concretely in the proposed insulin cost-sharing framework. Specifically, the rule proposes that for plan years beginning in 2026 and thereafter, the applicable cost-sharing amount for a covered insulin product shall be the lesser of $35; 25 percent of the maximum fair price established under Part E of subchapter XI; or 25 percent of the negotiated price, as defined in § 423.100, of the covered insulin product under the applicable plan. ^[1]

This three-way calculation embeds negotiated price as a real-time, plan-specific variable that directly sets patient cost-sharing at the point of sale. Operationalizing this requirement demands that Part D plan sponsors, pharmacy benefit managers ("PBMs"), and manufacturers simultaneously reconcile negotiated prices—which under existing regulatory definitions at § 423.100 can encompass multiple forms of price concessions, including certain rebates—with the applicable cost-sharing figure to be transmitted to dispensing pharmacies. ^[1]

Lilly's view is that the timeline as proposed does not allow sufficient time for the following necessary steps: (a) technical reprogramming of adjudication systems at the plan, PBM, and pharmacy levels; (b) renegotiation or amendment of existing manufacturer-PBM and manufacturer-plan contracts to account for the new cost-sharing floor; (c) training of plan staff and downstream dispensing entities; and (d) regulatory certainty regarding how negotiated prices interact with existing rebate agreements. Lilly urges CMS to extend the effective date for negotiated-price-dependent provisions by no fewer than 12 months—to plan year 2027 at the earliest—to allow the supply chain adequate time to implement these changes accurately and without disrupting patient access.

Comment 2: The Rule Creates Unresolved Ambiguity Between Negotiated Prices and Rebate Obligations

The proposed rule invokes the existing definition of "negotiated price" at 42 C.F.R. § 423.100 as the operative price point for multiple downstream calculations, including the insulin cost-sharing formula described above. ^[1] However, the rule does not, in the text excerpted and published at 89 Fed. Reg. 99340–99579, provide explicit guidance on how the negotiated price—which existing regulatory frameworks may or may not require to reflect certain post-sale price concessions, including manufacturer rebates paid to PBMs or plan sponsors—is to be calculated and reported for purposes of satisfying the proposed cost-sharing caps. ^[1]

This ambiguity is not merely technical. Lilly, like other pharmaceutical manufacturers, operates under long-term rebate contracts with plan sponsors and PBMs that were negotiated under existing regulatory and market conditions. If CMS now requires that negotiated prices reflect additional or different price concessions than currently contemplated under § 423.100, those contractual arrangements may need to be renegotiated—a process that cannot be completed within the proposed implementation window. Lilly urges CMS to issue, concurrently with the final rule, binding sub-regulatory guidance (at minimum an operational policy memorandum with notice-and-comment procedures) that definitively states: (i) whether and to what extent manufacturer rebates paid to PBMs or plan sponsors are incorporated into the "negotiated price" for purposes of the proposed cost-sharing calculations; and (ii) how plans and manufacturers should document and reconcile these amounts for audit purposes.

Without this clarification, regulated parties face the risk of inconsistent compliance practices, potential enforcement exposure, and—most critically—variable patient cost-sharing outcomes that could undermine the very transparency and beneficiary-protection goals CMS articulates as the rule's purpose. ^[1]

Comment 3: The Insulin Cost-Sharing Framework Merits Particular Attention Given Lilly's Direct Product Involvement

The proposed rule would revise the applicable copayment amount for covered insulin products for plan year 2026, establishing the lesser-of formula described above. ^[1] Lilly is among the largest manufacturers of covered insulin products in the United States and has already taken voluntary steps to reduce insulin list prices—a market-driven development that CMS should account for in its regulatory analysis. To the extent that a covered insulin product's negotiated price, as defined under § 423.100, is already at or near a level where 25 percent of that price falls below $35, the proposed framework may function as intended without further regulatory intervention for that product. ^[1] However, for products where the negotiated price calculation remains unsettled—particularly in light of the unresolved rebate-interaction question identified in Comment 2—the potential for plan-to-plan variation in the applicable cost-sharing amount is significant.

Lilly urges CMS to clarify, in the preamble to the final rule, how the agency expects the lesser-of formula to operate across a range of illustrative price scenarios, so that plans and manufacturers can model compliance obligations with sufficient precision. This is a transparency measure that costs CMS nothing operationally but substantially reduces downstream compliance risk.

Comment 4: The Anti-Obesity Medication Coverage Proposal Warrants Expeditious Finalization—With Implementation Clarity

The proposed rule would reinterpret the statutory exclusion of "agents when used for anorexia, weight loss, or weight gain" under section 1927(d)(2)(A) of the Social Security Act to permit Part D coverage of anti-obesity medications ("AOMs") when used to treat obesity, and would apply the same reinterpretation to the Medicaid program. ^[1] Lilly manufactures products in this therapeutic category and strongly supports this proposed reinterpretation, which reflects the current medical consensus that obesity is a chronic disease rather than a behavioral choice.

Lilly urges CMS to finalize this provision on the fastest feasible timeline, with a clear implementation date that allows plan sponsors sufficient time to update their formularies, establish prior authorization criteria, and communicate coverage changes to enrollees. Lilly also urges CMS to confirm, in the final rule or accompanying guidance, that the revised coverage interpretation applies uniformly to all approved AOMs meeting the definition of a covered outpatient drug under Part D, without requiring additional case-by-case determinations by plan sponsors. Regulatory fragmentation at the formulary-management level would slow access and defeat the purpose of the proposed reinterpretation.

Comment 5: Marketing and Communications Reforms—Support with Implementation Timeline Concerns

The proposed rule proposes that new marketing and communications policies shall be applicable beginning October 1, 2025, for all contract year 2026 marketing and communications. ^[1] The proposed rule also contemplates that the provider directory formatting provision at § 422.111(m) will require 2025 plan year directory data to be made available for testing by summer 2025, with 2026 plan year data due October 1, 2026. ^[1]

Lilly supports the substance of CMS's marketing transparency reforms, including the broadened marketing definition and the expanded agent/broker disclosure requirements regarding Medicare Savings Programs, Extra Help, and Medigap guaranteed-issue rights. ^[1] These provisions promote genuinely informed beneficiary choice and are consistent with Lilly's longstanding support for a well-functioning, transparent marketplace. Lilly notes, however, that to the extent agents and brokers are now required to discuss the availability of products and programs across a broader set of topics—including low-income subsidy programs and Medigap implications—CMS should provide standardized training materials and a model disclosure script in advance of the October 1, 2025, effective date to ensure consistent implementation.

IV. Recommended Changes

CMS should adopt the following concrete modifications in the final rule and accompanying guidance:

1. 12-Month Extension of Negotiated-Price Implementation. Extend the effective date for all provisions that depend upon real-time application of the negotiated price as defined under 42 C.F.R. § 423.100 for cost-sharing calculations—including but not limited to the insulin lesser-of formula—from contract year 2026 to contract year 2027, with an applicability date of January 1, 2027.

2. Binding Guidance on Negotiated Price and Rebate Interaction. Publish, no later than 90 days following issuance of the final rule, a binding operational policy memorandum (subject to notice and public comment where required by the APA) that: (a) defines, with specificity, which manufacturer price concessions paid to PBMs or plan sponsors are reflected in the "negotiated price" for purposes of the cost-sharing calculations proposed in this rule; (b) specifies the documentation and reconciliation obligations of plans, PBMs, and manufacturers; and (c) provides safe-harbor standards for parties acting in good faith under existing contractual arrangements during any transition period.

3. Illustrative Scenarios in the Preamble. In the final rule preamble, include at least three illustrative numerical examples showing how the lesser-of insulin cost-sharing formula operates under different negotiated price and maximum fair price assumptions, so that plans and manufacturers can model compliance obligations with precision.

4. Expedited Finalization of AOM Coverage Provisions. Finalize the AOM coverage reinterpretation as early as operationally feasible, with a confirmed applicability date, and issue accompanying sub-regulatory guidance confirming that the reinterpretation applies uniformly across all qualifying AOMs without additional plan-level determinations.

5. Standardized Agent/Broker Training Materials. Publish standardized training materials and a model beneficiary disclosure script for the expanded agent/broker requirements no later than July 1, 2025—sufficiently in advance of the October 1, 2025, marketing communications effective date—to ensure consistent implementation.

V. Conclusion

Eli Lilly and Company, through Tiber Creek Health Strategies, Inc., respectfully urges CMS to consider these comments carefully as it finalizes the Contract Year 2026 policy changes. Lilly supports the transparency and beneficiary-protection goals that animate this proposed rule and stands ready to work constructively with CMS to achieve them on a timeline that is operationally sound and legally durable. We respectfully request the opportunity to engage further with the agency—including through technical workgroups or stakeholder meetings—on the negotiated-price and rebate-interaction questions identified above.

Please direct any questions or requests for clarification regarding this submission to Tiber Creek Health Strategies, Inc., on behalf of Eli Lilly and Company.

Respectfully submitted,

Tiber Creek Health Strategies, Inc. *On behalf of Eli Lilly and Company* January 27, 2025

*This letter is a Sporos-generated first draft prepared for client and counsel review and revision; it does not constitute legal advice. Every bracketed citation resolves to a primary source as identified in the evidence corpus: ^[1] = 89 Fed. Reg. 99340 (Dec. 10, 2024) (CMS-4208-P); ^[4]–^[21] = U.S. Senate Lobbying Disclosure Act filings as dated. The corpus surfaced no substantive public comments previously filed on docket CMS-4208-P; the comment record may contain additional arguments not addressed herein. The comment deadline for this rulemaking was January 27, 2025, at 5:00 p.m. Eastern Time.*