CMS makes drug price talks permanent: up to 20 drugs a year

CMS can pick up to 20 drugs a year for Medicare price negotiation from 2029 on, under a final rule issued Nov. 5. The rule, CMS-4215-F, takes effect Dec. 5. CMS calls it a permanent framework for negotiating prices of high cost drugs.

The Inflation Reduction Act told CMS to run the first three cycles, covering prices for 2026 through 2028, through guidance. That authority is expiring. The final rule writes those policies into regulation, adds new ones and changes some based on what CMS learned in the first rounds.

Why it matters: the negotiated price, which the law calls the maximum fair price, now rests on regulation instead of yearly guidance. Part D plans, pharmacies and drugmakers get fixed rules for selection, coverage and payment that carry into every year after 2028.

What the rule locks in

The cap of 20 covers Part D and Part B drugs together. CMS can also pull drugs from earlier rounds back in for renegotiation. When it renegotiates for 2029 and later, CMS will weigh the price already agreed as one of the manufacturer factors.

A temporary floor for small biotech drugs applies in 2029 and 2030. For a qualifying drug, CMS cannot offer or accept a price below that floor.

“This rule provides additional tools to help CMS negotiate better deals, achieve greater savings for taxpayers and beneficiaries, and improve health outcomes for seniors who rely on the Medicare Prescription Drug Program,” CMS Administrator Dr. Mehmet Oz said.

One piece is still open. CMS said it will release final guidance this fall on how manufacturers make the negotiated price work in 2028, Part B drugs included. Rules for 2029 and later come through rulemaking in 2027.

The formulation loophole

The rule targets a drugmaker who adds a second ingredient to an existing drug to create a new formulation with a new way to give it. Under the old fixed combination policy, that product could count as a different drug and sit outside selection or outside the negotiated price.

Now CMS will group the two products when they share an active ingredient, come from the same NDA or BLA holder, and the added ingredient enables a new route of administration. CMS gave its own example: a product with ingredient X plus hyaluronidase gets grouped with the same holder’s product that contains only X. CMS said the policy removes the incentive to shift patients to the new version to dodge the negotiated price.

What Part D plans and pharmacies get

Two Part D rules move from guidance into regulation. Plans must carry every selected drug with a negotiated price in effect on their formularies. The price a plan pays a pharmacy for that drug can be no more than the negotiated price plus any dispensing fee.

The calendar

The CMS timeline for the fourth cycle:

• December 2026: deadline for biosimilar makers to ask CMS to delay selecting a reference drug.
• Feb. 1, 2027: CMS publishes up to 20 selected drugs, any renegotiation picks and the up to 30 top negotiation eligible drugs by combined Part B and Part D spending.
• Feb. 28, 2027: manufacturers sign agreements. March 1, 2027: manufacturer data due.
• June 1, 2027: CMS sends initial offers. Manufacturers have 30 days to accept or counter.
• Jan. 1, 2029: agreed prices take effect.

Earlier rounds covered Novo Nordisk’s Wegovy and Ozempic, Bristol Myers Squibb’s Pomalyst, Pfizer’s Ibrance and AstraZeneca’s Calquence, Fierce Healthcare reported. The third round, with prices in 2028, includes Gilead’s Biktarvy, AbbVie’s Botox and Eli Lilly’s Trulicity. Drugmaker court challenges, including from PhRMA, have repeatedly stalled.