CMS finalizes permanent framework for Medicare drug price negotiations

Following proposals issued in June and subsequent public feedback, CMS has finalized the permanent framework governing Medicare drug price negotiations from 2029. The regulations codify evidence and negotiation requirements, address selected reformulations and introduce provisions covering small-biotech products, generic and biosimilar competition, and Medicare Part D.

The Baseline

• CMS has finalized the permanent regulatory framework proposed in June for negotiation cycles beginning with IPAY 2029.
• Up to 20 additional Medicare Part B and Part D drugs may be selected in each future cycle.
• The final provisions cover comparative evidence, renegotiation, selected reformulations, small-biotech drugs and generic or biosimilar competition.

The US Centers for Medicare & Medicaid Services (CMS) has finalized regulations governing the Medicare Drug Price Negotiation Program from Initial Price Applicability Year (IPAY) 2029 onward.

Published on November 5, 2026, the final rule follows proposals issued in June and subsequent public feedback. It replaces the guidance-based approach used during the first three negotiation cycles with a permanent regulatory framework covering drug selection, evidence submissions, negotiation and renegotiation. The regulations take effect on December 5, 2026.

As outlined in the supporting factsheet, beginning with IPAY 2029 CMS may select up to 20 additional negotiation-eligible drugs covered under Medicare Part B or Part D. Previously negotiated products may also be selected for renegotiation when specified criteria are met. The resulting Maximum Fair Prices (MFPs), the prices negotiated between CMS and manufacturers, will apply from 2029.

Manufacturers must submit information required by CMS, including the non-Federal Average Manufacturer Price and data relating to manufacturer-specific negotiation factors. Manufacturers and other interested parties may also voluntarily submit evidence on selected drugs and their potential therapeutic alternatives.

CMS will consider evidence from comparative effectiveness studies when developing offers and assessing counteroffers. The rule also requires manufacturers to update submitted data, making changes in the evidence base potentially relevant during negotiation and renegotiation.

The process includes engagement with manufacturers and interested parties, including patients. CMS will provide a written initial offer with a concise justification, after which manufacturers can accept the offer or submit a counteroffer. The process may include negotiation meetings and further price exchanges. CMS will publish agreed prices and accompanying explanations.

A further provision addresses what CMS describes as the “fixed combination drug loophole”, concerning fixed-combination products that CMS considers new formulations of existing medicines. Where an additional component creates a new formulation and enables a different route of administration, CMS may group it with the original product. CMS described the policy as a safeguard against manufacturers shifting utilization to a new formulation to delay selection or avoid application of an agreed price.

Generic or biosimilar approval will not automatically remove a product from negotiation. CMS must determine that the competitor is subject to “bona fide marketing,” meaning it is marketed following approval or licensure.

The rule also replaces the previous small-biotech exemption with a temporary floor limiting how low CMS may set prices for qualifying products during 2029 and 2030.