CMS confirms manufacturer participation as third cycle of Medicare drug price negotiations moves forward

Manufacturers of medicines selected for the third cycle of Medicare drug price negotiations have confirmed their participation in the program, allowing the next phase of negotiations under the Inflation Reduction Act to move forward as planned.

The announcement from the Centers for Medicare & Medicaid Services (CMS) follows the agency’s release in January of the 15 medicines selected for the third negotiation cycle (IPAY 2028) under the Medicare Drug Price Negotiation Program (DPNP). Manufacturer participation formally initiates the negotiation process that will determine maximum fair prices (MFPs) for the selected medicines, with the negotiated prices scheduled to take effect in 2028.

Under the program, manufacturers whose products are selected for negotiation must sign agreements with CMS confirming their participation. Companies that decline to participate face substantial financial penalties or the potential withdrawal of their products from the Medicare and Medicaid programs. As a result, the confirmation of manufacturer participation represents an important procedural milestone, enabling negotiations between CMS and participating companies to proceed according to the program’s established timeline.

Manufacturers will now submit detailed information on their products, including evidence on clinical benefits, research and development costs, and sales volumes. CMS will use these submissions alongside other available evidence to develop an initial offer for the MFP. Companies will then have an opportunity to respond and engage in further discussions before final negotiated prices are published in late 2026. The negotiated prices are expected to take effect on January 1, 2028.

The process is unfolding as the DPNP continues to expand in scope. The third cycle includes the first physician-administered medicines covered under Medicare Part B and also introduces the program’s first renegotiation of a previously selected drug, reflecting how the framework is evolving as additional negotiation cycles are implemented.

Another emerging question is how the drug price negotiations will interact with other evolving US drug pricing initiatives, particularly Most-Favored-Nation (MFN) agreements. Analysts have noted that the selection of the GLP-1 therapy Trulicity (dulaglutide) is significant because it follows the earlier negotiation of semaglutide for the 2027 implementation year. CMS guidance indicates that negotiated prices for medicines considered therapeutic alternatives may be considered in later negotiations. However, uncertainty remains over how alternative pricing arrangements, including MFN agreements and related initiatives such as the BALANCE model, a voluntary payment and coverage model designed to expand access to GLP-1 medicines across Medicare and Medicaid, might influence negotiations. These developments introduce additional complexity as CMS determines MFPs while other policy tools seek to lower drug costs through parallel mechanisms.

The negotiations are also unfolding against a complex legal backdrop. Multiple pharmaceutical manufacturers and industry organizations have filed lawsuits challenging aspects of the Medicare DPNP, arguing that the policy exceeds statutory authority and raises constitutional concerns. Although many of these challenges have been dismissed or rejected by lower courts, several cases continue to progress through the US court system.

As the program advances through successive cycles, stakeholders across the pharmaceutical industry, payer community, and health policy landscape will be closely watching how the negotiation process develops and what it signals for the future of US drug pricing policy. These questions are also expected to feature prominently in broader policy discussions, including the opening plenary at ISPOR 2026, where policymakers, industry representatives, and payers will examine how initiatives such as MFN pricing and IRA negotiations may shape the economic and regulatory landscape in the US and beyond.