The Centers for Medicare & Medicaid Services on Thursday issued a final rule that sets a permanent framework for negotiating prices of high-cost drugs. The rule sets policies for the Medicare Drug Price Negotiation Program beginning with prices effective in 2029.
CMS said the policies give participating manufacturers greater predictability and support continued innovation. CMS Administrator Dr. Mehmet Oz said the rule provides additional tools to help the agency negotiate better deals, achieve greater savings for taxpayers and beneficiaries, and improve health outcomes for seniors who rely on the Medicare Prescription Drug Program. “President Trump directed us to lower drug costs for Americans using every tool at our disposal,” Oz said.
By Feb. 1, 2027, CMS will select up to 20 additional negotiation-eligible drugs covered under Part D and/or payable under Part B. The agency will also select drugs for renegotiation, as appropriate, for the fourth cycle of negotiations. CMS said the rule gives patients and manufacturers a clear path as the agency builds on the program’s results and continues negotiating prices for high-cost drugs.
The rule finalizes a proposed policy on specific fixed combination drugs that CMS determines are new formulations of existing drugs. CMS said it believes the policy will avoid creating an incentive for the primary manufacturer to shift patients toward the new formulation and circumvent the maximum fair price for those patients. The agency said the policy is meant to address potential program integrity concerns.
The rule also implements the Temporary Floor for Small Biotech Drugs, which CMS said the law requires. The floor prohibits CMS from offering or accepting a counteroffer for a maximum fair price below a specified floor for certain eligible small biotech drugs. That limit applies for initial price applicability years 2029 and 2030. The release did not state the dollar level of the floor.
The rule also writes into regulation two policies that affect the Medicare Part D benefit, consistent with statutory requirements. Part D plans must include selected drugs that have a maximum fair price in effect on their formularies. The negotiated prices that plans pay dispensing entities are limited to the maximum fair price plus any dispensing fees.
The release did not name the drugs CMS will select, and it did not say how much beneficiaries or taxpayers would save. CMS posted links to the final rule in the Federal Register, a fact sheet, and a timeline of key milestones for the 2029 initial price applicability year. The agency said further information on the program, including selected drugs, agreed-upon maximum fair prices, and past guidance, is available on its website.