CMS publishes negotiated prices for fifteen major drugs in the second round of Inflation Reduction Act negotiations

The second round of Medicare drug price negotiations under the Inflation Reduction Act sets new reference points for fifteen widely used therapies. The update offers insight into how CMS is applying the statutory framework and how these decisions may shape future pricing, evidence generation, and innovation.

The Centers for Medicare & Medicaid Services (CMS) has released the negotiated “maximum fair prices” (MFPs) for 15 widely used medicines for chronic conditions such as type 2 diabetes, respiratory diseases, and cancer under the Inflation Reduction Act (IRA). The announcement, a statutory requirement under the IRA, confirms the second round of Medicare drug price negotiations, with the new prices taking effect from January 1, 2027. This cycle reflects the law’s continuing emphasis on managing expenditure for single-source drugs without generic or biosimilar competition.

According to CMS data published alongside the announcement, the selected medicines represent substantial use within Medicare Part D. In 2024, about 5.3 million beneficiaries used one or more of the 15 drugs, which together accounted for US$42.5 billion in gross covered prescription costs and around 15% of total Part D spending. Over the same period, beneficiaries paid US$1.7 billion out-of-pocket. CMS estimates that if the negotiated prices had been in place in 2024, Medicare would have saved about US$12 billion in net costs, or US$8.5 billion when including Coverage Gap Discount Program spending. Looking to 2027, the agency projects that beneficiaries could save roughly US$685 million in out-of-pocket costs under the standard benefit design.

The latest list includes several therapies with large Medicare user populations and notable discount levels relative to 2024 list prices. These include the diabetes and weight-management medicines Ozempic and Wegovy (Novo Nordisk), used by more than 2.2 million beneficiaries and carrying a 71% discount. Respiratory therapies Trelegy Ellipta and Breo Ellipta (GSK), used by 1.27 million and 626,000 beneficiaries, respectively, carry estimated discounts of 73% and 83%. Linzess (AbbVie), used for chronic gastrointestinal conditions by 632,000 beneficiaries, has a 75% discount. Oncology therapies such as Ibrance (Pfizer) and Xtandi (Astellas/Pfizer) also feature in this negotiation cycle.

How CMS determined the negotiated prices

CMS outlined a structured, multistep negotiation process in which the agency developed an initial offer for each drug, drawing on evidence requirements specified in statute. Manufacturers submitted counteroffers, and CMS held three meetings with each company to exchange evidence, discuss valuations, and revise offers. CMS adjusted its offers upward during these discussions, while manufacturers revised their counteroffers downward.

In determining the prices, CMS drew on statutory factors outlined in section 1194(e) of the Social Security Act. These include manufacturer-submitted data on R&D costs and the extent to which they had been recouped, prior federal support, production and distribution costs, market and sales information, and details on patents and regulatory exclusivities. CMS also considered evidence on therapeutic alternatives, comparative effectiveness, and unmet medical need, drawing on information submitted by drug companies, patient and caregiver input, academic experts, clinicians, responses to public information requests, patient-focused roundtables, and CMS’s own literature and guideline reviews.

For eight products, CMS and manufacturers reached agreement through iterative exchanges, with CMS accepting a revised counteroffer in seven cases. For the remaining seven drugs, CMS issued a written final offer that each manufacturer accepted by the statutory deadline. In its announcement, CMS stated: “Throughout the negotiation process, the CMS team took into account the factors outlined in the law… which support the need for innovation and drug development as well as better prices for people with Medicare and the Medicare program.”

End to speculation, yet debate continues

The release of the second-round MFPs follows months of analysis and modeling as stakeholders sought to anticipate how CMS would apply the statutory framework in only the second cycle of the negotiation program. Building on lessons from the first round, observers have been watching closely for indications of how CMS weighs comparative effectiveness evidence, statutory discounts, prior MFPs, and real-world clinical data when shaping its initial offers.

The process has also prompted a broader methodological question. Given the extensive evidence requirements embedded in the IRA, including clinical data, economic information, and real-world evidence, some analysts have asked whether the program is beginning to take on characteristics of a de facto health technology assessment (HTA) framework, even if it does not formally adopt HTA principles. Several commentators have even suggested that an explicit HTA framework could strengthen future negotiation cycles by bringing greater structure and transparency to the process.

The publication also arrives amid ongoing debate about how price regulation may influence pharmaceutical innovation. Recent analyses suggest the IRA may already be shaping investment decisions, particularly in oncology, with studies indicating a decline in industry-funded post-approval trials for certain small-molecule cancer therapies. While these findings reflect an evolving evidence base, they contribute to wider concerns about how manufacturers may recalibrate research portfolios in response to future price ceilings.

Looking ahead

With US drug pricing policies carrying global implications, the implementation of these negotiated prices will be closely watched as stakeholders look to understand how they influence utilization patterns, evidence generation, and long-term decision-making. This scrutiny extends beyond the IRA itself, as broader policy discussions including potential Most-Favored-Nation (MFN) pricing models suggest that Medicare negotiations may be only one component of a wider shift in the US pricing landscape.

As the next rounds of negotiation unfold, a central question remains: how can policymakers balance efforts to improve affordability with the need to sustain robust, forward-looking investment in clinical innovation?