US Gov’t Proposes New Measures for Drug-Price Negotiations Program
As part of US drug-pricing reforms, a new proposal from the US Centers for Medicare & Medicaid Services (CMS) would establish a permanent framework for the Medicare Drug Price Negotiation Program by codifying the program, which was created by the Inflation Reduction Act. The proposed rule would also refine policies for negotiating and renegotiating high-cost, single-source drugs beginning with initial price applicability in 2029 and implement measures for a temporary floor of drug prices in the negotiation process for “small biotech drugs.”
The Inflation Reduction Act, signed into law in 2022, created the Medicare Drug Price Negotiation Program, which provided the US government the authority and requirement to negotiate prices for certain drugs under Medicare, the US federal health insurance program for people 65 or older. Under the program, CMS directly negotiates with pharmaceutical companies the prices of certain high-expenditure (defined by levels of Medicare spending) and single-source drugs (defined as drugs without generic/biosimilar competition) and based on other selection criteria.
For initial price applicability years 2026 through 2028 of the negotiation program, the law directed CMS to implement the negotiation program through program instruction and other forms of program guidance. With this program instruction authority expiring, CMS is now proposing to codify the negotiation program for 2029 and beyond.
To date, the US government has conducted three rounds of price negotiations, with the latest round of drugs selected for price negotiations announced in January (January 2026). The US government selected 15 prescription drugs for price negotiation, with the negotiated prices, once agreed to, taking effect January 1, 2028. In all, 40 prescription drugs have been subject to price negotiations under the Medicare Drug Price Negotiation Program since the Inflation Reduction Act was enacted in 2022—the 15 drugs selected in January (January 2026) for negotiation and 25 drugs for which the prices have already been negotiated, with the negotiated prices for these drugs selected going into effect this year (2026) and next year (2027).
Under the proposed rule, CMS will select up to 20 additional negotiation-eligible drugs covered under Medicare Part D (which covers most outpatient prescription drugs from pharmacies and other pharmacy providers) and/or payable under Medicare Part B (which applies to prescription drugs administered in a physician’s office or clinical/hospital outpatient setting) for the fourth cycle of negotiations and subsequent cycles of the negotiation program. In addition to the drugs selected for negotiation, CMS may also select drugs negotiated in the first, second, or third cycles of negotiation to be renegotiated, if those selected drugs meet certain eligibility and selection criteria.
The proposed rule also includes a narrow modification of the policy used to identify qualifying single-source drugs to address potential program integrity concerns posed by certain new formulations, according to CMS.
In addition to codifying the existing negotiation program, CMS is proposing to implement a temporary floor in negotiating maximum fair prices for “small biotech drugs” as required by law, which limits CMS from offering or agreeing to a counteroffer for a maximum fair price for small biotech drugs below the floor for certain eligible drugs during initial price applicability years 2029 and 2030. CMS says this “supports continued innovation while maintaining fairness for small biotech companies.”
The rule also proposes to codify two policies affecting the Medicare Part D benefit, consistent with statutory requirements. Specifically, CMS would codify policies related to formulary inclusion of selected drugs and the definition of “negotiated price.” CMS says that these policies ensure that Medicare Part D plans include selected drugs with a maximum fair price in effect on their formularies and that the negotiated prices paid to dispensing entities by Medicare Part D plans do not exceed the maximum fair price plus any dispensing fees.
There is a 60-day public comment period on the proposed rule, which closes on August 17, 2026, as CMS considers these comments in developing the final rule.
