On September 30, 2025, hours before the government shutdown began, the Centers for Medicare & Medicaid Services (CMS) released the Final Guidance for Initial Price Applicability Year 2028 and Manufacturer Effectuation of the Maximum Fair Price in 2026, 2027, and 2028, along with a fact sheet, press release, and public comments.
Program Overview and Drug Selection
The Final Guidance follows the May 2025 release of the Draft Guidance, as CMS prepares to begin the drug price negotiation process for its third year. The Medicare Drug Price Negotiation Program, enacted under the Inflation Reduction Act (IRA) requires CMS to negotiate the prices, referred to as Maximum Fair Prices (MFPs), of certain drugs with high Medicare expenditures. For the ten Part D drugs selected for negotiation for Initial Price Applicability Year (IPAY 2026), the MFPs have been announced. Negotiations are ongoing for the 15 Part D drugs selected for negotiation for IPAY 2027. For IPAY 2028, up to 15 more drugs will be selected for negotiation, and for the first time, Part B drugs may be selected. These drugs will be announced by February 1, 2026. In IPAY 2029 and beyond, up to 20 drugs will be selected for each year.
Notable Topics
The inclusion of Part B drugs in the negotiation process has raised numerous questions for health policy stakeholders across the supply chain. While CMS addressed some aspects of negotiation for Part B drugs, the agency intends to provide detailed Part B MFP effectuation policy in the future. When released, this process will outline how manufacturers of selected drugs will ensure that hospitals, physicians, and other providers who administer Part B drugs to MFP-eligible individuals receive the MFP. Of note, many organizations were watching to see whether CMS would address the inclusion of MFP in Average Sales Price (ASP) for Part B drugs selected for negotiation, given implications for reimbursement both within fee-for-service Medicare and for payers who utilize Medicare pricing as a basis for setting their own payment rates. While CMS did not address this policy in the guidance, the agency directed stakeholders to the CY 2026 Physician Fee Schedule (PFS) Proposed Rule, where CMS clarified that MFP will be included in ASP calculations, and that the agency does not intend to publish ASP-based payment rates for selected drugs.
While CMS did not address Part B MFP effectuation detail, the agency did provide an overview of the renegotiation process, new for IPAY 2028. Some topics not previously addressed in the draft guidance were also included, such as the use of Medicare Advantage (MA) claims data in the determination of drug spending; clarification on how CMS will determine whether a vaccine for an infectious disease is eligible for negotiation; and updates to the Orphan Drug Exclusion, aligned with changes from the One Big Beautiful Bill Act (OBBBA). CMS also contemplated a change to how it views fixed combination products for the purposes of negotiation that may have impacted when and whether certain drugs would have been eligible for negotiation; while CMS will maintain its process from the draft guidance, the agency is considering changes to its approach for these drugs in future policymaking.
Stakeholder Engagement and Future Opportunities
While stakeholders have continued to engage with CMS on the drug price negotiation program, there has been a steep decline in the number of comments CMS has received on the guidance. When the IPAY 2026 initial guidance was released, CMS received more than 7,500 comments; for IPAY 2027 and IPAY 2028, CMS received only 145 commentsand 122 comments, respectively.
Beginning with IPAY 2029, Medicare Drug Price Negotiation Program implementation will shift from guidance to rulemaking. Inflation rebates and the Medicare Part D benefit redesign, two other provisions from the IRA, were also initially implemented via guidance, and subsequently codified via rulemaking. Moving forward, CMS may take a similar approach in codifying guidance and then issuing annual updates.
Applied Policy is ready to help stakeholders navigate the Medicare Drug Price Negotiation Program and other drug pricing policies from CMS.