What Happened?

If you have Medicare drug coverage, the price your plan pays for a drug picked for Medicare drug price negotiation can no longer top a government-set "maximum fair price," starting with 2029. The Department of Health and Human Services finalized the rules, which take effect Dec. 5, according to a Legis1 review of the final rule published Nov. 9. ​

The Centers for Medicare & Medicaid Services (CMS), the agency that runs Medicare, selected 10 drugs for 2026, 15 for 2027 and 15 for 2028. Up to 20 drugs will be selected each year beginning in 2029. A drug generally becomes eligible only after at least seven years since FDA approval, or 11 years since licensure for biologics.

The rules change four things:

  • Plan payments: The negotiated price of a selected drug "must not exceed the maximum fair price" plus dispensing fees.
  • Formularies: Part D plan sponsors must include each selected drug that has a maximum fair price in effect.
  • Drugmakers: Manufacturers face a deadline to sign agreements with CMS.
  • Combination drugs: A fixed-combination drug and a new formulation are treated as one when the new version adds a component that enables a different route of administration.

Why Does it Matter to Me?

CMS estimates, using 2025 data, that negotiated prices will cut allowed costs by 11.3 percent for drugs selected for 2026 and 18.2 percent for drugs selected for 2027. If a drug you take is selected, your plan must cover it while its maximum fair price is in effect. The plan can still drop it after giving notice. CMS cites the Inflation Reduction Act of 2022 as the law behind the program.

Both Sides, Now

CMS says: "Without regulatory implementation of the Negotiation Program, the Medicare program cannot comply with Federal law, reduce prescription drug costs for beneficiaries, or achieve cost savings provided under statute."

Many of the roughly 11,330 timely comment letters, from drugmakers, patient groups, pharmacies and health plans, raised concerns about drug development. Opponents argue negotiation may weaken incentives for research, especially after a drug is approved.

One April 2025 study in Therapeutic Innovation & Regulatory Science found the 2022 law was associated with fewer industry-sponsored post-approval trials, but not fewer government-funded ones. A Health Affairs Scholar study found that after the law passed, small-molecule drugs lost 4.5 more post-approval cancer trials per month than biologics. Both describe associations, not proof that negotiation caused the changes. CMS wrote these rules itself under that 2022 law, which Congress passed.

What Happens Next?

The rules take effect Dec. 5. CMS skipped the usual 60-day wait because it needs about seven weeks to review biosimilar makers' delay requests before the Feb. 1 deadline for publishing the selected drug list.

CMS guidance still governs 2026 through 2028. Manufacturers of selected drugs must sign their agreements by 11:59 p.m. Pacific Standard Time on Feb. 28 after the list is published.

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AllCiv makes it easy to stay politically informed and involved.

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