Medicare Begins Negotiating Prescription Drug Prices
Published Date: 6/16/2026
Proposed Rule
Summary
Starting soon, Medicare will negotiate drug prices to help lower costs for people who rely on prescription drugs. This change affects Medicare users and drug companies, aiming to make medicines more affordable by 2026. The program also updates rules about combined drugs, so everyone gets better deals and clearer benefits.
Analyzed Economic Effects
7 provisions identified: 4 benefits, 1 costs, 2 mixed.
Medicare spending shifts through 2031
CMS states the Inflation Reduction Act's effects will reduce government expenditures for Medicare Part B, increase Part D expenditures through 2030, and decrease Part D expenditures beginning in 2031. These spending shifts reflect the program's phased fiscal impacts across the years described.
Medicare begins drug price negotiations
Medicare is negotiating maximum fair prices (MFPs) for certain high-expenditure, single-source drugs. The Secretary selected 10 drugs for the first year and the negotiated prices for those drugs took effect in initial price applicability year 2026.
Annual drug selections expand to 20
Beginning with initial price applicability year 2029, the Secretary may select up to 20 drugs covered under Part D and/or payable under Part B for negotiation each year. CMS proposes that selection and negotiation processes for 2029 will occur during calendar year 2027.
Temporary floor for small biotech drugs
CMS proposes rules to implement a Temporary Floor for Small Biotech Drugs for initial price applicability years 2029 and 2030 and includes a definition for eligible Small Biotech Drugs. CMS will explain the process for a Primary Manufacturer to request consideration for this Temporary Floor.
Small biotech exclusion ended in 2028
CMS notes that the exclusion for small biotech drugs from negotiation eligibility ended in initial price applicability year 2028 and therefore is not codified in this rule. The proposed rule nevertheless includes a definition for Small Biotech Drug to support the Temporary Floor calculation.
Renegotiation authority begins in 2028
Starting with initial price applicability year 2028, CMS may determine drugs eligible for renegotiation and may select drugs for renegotiation of their MFPs. The Secretary selected one drug for renegotiation for initial price applicability year 2028.
Fixed-combination drug policy modified
CMS proposes a narrow modification to the fixed combination drug policy for certain new formulations: if products from the same NDA/BLA holder differ because a new active ingredient enables an alternative route of administration, CMS will identify the potential qualifying single source drug using all dosage forms and strengths offered by that NDA/BLA holder. This changes how certain combination products may be treated for negotiation eligibility.
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Key Dates
Department and Agencies
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