2029 Federal Rule Change: Ending the IV-to-Oral Drug ‘Loophole’-What It Means for Medicine Pricing & Patient Costs

A proposed U.S. Medicare rule could eliminate price protections for certain cancer immunotherapies administered under the skin, potentially slashing costs for drugs like Merck’s Keytruda and Bristol Myers Squibb’s Opdivo. The rule, expected to take effect in 2025, targets what regulators call a “loophole” allowing these medications to bypass Medicare’s price negotiation system—despite their growing use in treating advanced cancers.

According to a draft proposal from the Centers for Medicare & Medicaid Services (CMS), the change would apply to biologics and biosimilars transitioning from intravenous (IV) to subcutaneous (under-the-skin) administration. Industry analysts estimate these drugs account for nearly $30 billion in annual U.S. spending, with subcutaneous versions often costing 20–40% more than their IV counterparts (CMS fact sheet).

The rule has sparked urgency among patient advocacy groups and oncologists, who warn it could limit access to life-saving treatments. “This isn’t just about price—it’s about whether patients can continue receiving these therapies at all,” said Dr. Elizabeth Kvale, chief medical officer at the American Society of Clinical Oncology (ASCO), in a statement to World Today Journal. “Many cancer patients rely on subcutaneous administration for convenience and reduced side effects.”

Why This Rule Targets Subcutaneous Cancer Drugs

The CMS proposal focuses on a technical distinction in Medicare’s drug pricing framework. Since 2003, biologics administered intravenously have been subject to Medicare’s competitive bidding program, which caps reimbursement rates. However, drugs reformulated for subcutaneous delivery—such as Keytruda (pembrolizumab) and Opdivo (nivolumab)—have avoided these price controls because they were originally approved for IV use.

Industry data shows subcutaneous versions of these drugs now make up over 60% of new prescriptions for metastatic melanoma and lung cancer (JAMA Oncology, 2023). The CMS argues this creates an unintended subsidy, allowing manufacturers to charge premium prices for the same active ingredient in a different delivery method.

Critics note the rule could disproportionately affect patients with rare cancers, who often rely on newer subcutaneous formulations that offer better tolerability. “For patients with limited treatment options, this could mean losing access to the only therapy that works for them,” said Sarah Liao, policy director at the National Coalition for Cancer Survivorship (NCCS).

Which Drugs Are Most at Risk?

The CMS proposal specifically names biologics transitioning from IV to subcutaneous administration, including:

• Keytruda (pembrolizumab, Merck) – Used for melanoma, lung cancer, and head/neck cancers
• Opdivo (nivolumab, Bristol Myers Squibb) – Approved for melanoma, kidney cancer, and lung cancer
• Portrazza (necitumumab, Eli Lilly) – For advanced squamous non-small cell lung cancer
• Ozempic (semaglutide, Novo Nordisk) – While primarily for diabetes, its subcutaneous formulation could face similar scrutiny

Pharmaceutical executives warn the rule could discourage innovation in drug delivery methods. “Subcutaneous administration has been a breakthrough for patients who struggle with IV infusions,” said a spokesperson for the Pharmaceutical Research and Manufacturers of America (PhRMA) in a statement. “This rule sends the wrong signal about supporting patient-centered care.”

How Would the Rule Work—and Who Would Be Affected?

If finalized, the rule would:

1. Apply to all biologics and biosimilars originally approved for IV use but later reformulated for subcutaneous delivery
2. Require Medicare to negotiate prices for these drugs starting in 2025, using the same bidding process as IV biologics
3. Allow manufacturers to appeal price determinations if they can prove the subcutaneous version offers significant clinical benefits
4. Exempt drugs where subcutaneous administration is the only approved route (e.g., insulin analogs)

Patient advocacy groups estimate the change could reduce Medicare spending on these drugs by $8–12 billion over five years, but warn of potential shortages if manufacturers withdraw subcutaneous versions. “We’re concerned about a two-tier system where patients in certain regions lose access to these therapies,” said Dr. Kvale.

What Happens Next in the Rulemaking Process?

The CMS proposal is currently in a 60-day public comment period, ending May 15, 2024. Key stakeholders—including the FDA, patient groups, and drugmakers—are expected to submit formal responses before CMS finalizes the rule by late 2024.

If implemented, the changes would take effect January 1, 2025, coinciding with Medicare’s annual drug pricing updates. The rule could also influence private insurers, who often follow Medicare’s pricing decisions.

Expert Reactions: Balancing Costs and Access

Economists argue the rule could improve equity in cancer care by reducing out-of-pocket costs for patients. “Medicare spends billions on these drugs, and taxpayers deserve fair pricing,” said Dr. Aaron Kesselheim, a Harvard Medical School professor who studies drug policy. “But we must ensure patients aren’t left without options.”

Oncologists, however, express concern about the rule’s unintended consequences. “Many of my patients with advanced cancer can’t tolerate IV infusions due to vein damage or fatigue,” said Dr. Rajesh Shah, a medical oncologist at Memorial Sloan Kettering Cancer Center. “Subcutaneous versions have been a game-changer for them.”

The debate highlights broader tensions in U.S. drug pricing policy, where cost containment often clashes with patient access. As CMS weighs public feedback, the outcome could set a precedent for how Medicare regulates drug delivery methods in the future.

For patients or providers seeking updates, CMS maintains a dedicated page on Medicare drug price negotiations. The National Cancer Institute also offers resources on cancer treatment options.

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