CMS releases final guidance for 2028 Medicare Drug Price Negotiation cycle

CMS has issued final guidance for the 2028 cycle of the Medicare Drug Price Negotiation Program, expanding the process to include Part B drugs, enhancing orphan drug protections, and introducing the first framework for renegotiation of previously selected medicines. 

Now in its third iteration, the US Centers for Medicare & Medicaid Services (CMS) has released its Final Guidance for the Initial Price Applicability Year (IPAY) 2028 under the Inflation Reduction Act (IRA) Medicare Drug Price Negotiation Program (DPNP). The finalized document follows draft guidance published earlier this year and clarifies how the program will operate, as well as how manufacturers must effectuate the Maximum Fair Price (MFP) in 2026, 2027 and 2028. 

Building on lessons from the first two negotiation cycles, where CMS announced prices for the initial 10 selected drugs and is due to publish MFPs for up to 15 additional Part D medicines by November 30, 2025, the new guidance broadens scope considerably. For the first time, Medicare Part B drugs and biologics will be included, alongside expanded provisions for orphan drugs, vaccines and the introduction of renegotiation. CMS said the DPNP guidance “incorporates significant policy refinements based on public feedback, with a particular focus on increasing transparency.” 

The inclusion of Part B-covered products such as physician-administered biologics marks a significant change. These products will be subject to the same framework as Part D drugs, with the Small Biotech Exception extended to Part B. CMS confirmed that additional program instructions will follow to address the practicalities of effectuating MFPs in this setting. 

The White House announcement highlighted three provisions. First, the Orphan Drug Exclusion has been broadened to cover products designated by the FDA for one or more rare diseases, provided all approved indications are for such conditions. This preserves incentives for rare disease research while maintaining negotiation eligibility. Recent analysis from the National Pharmaceutical Council suggests the IRA’s original exclusion may have discouraged development across multiple rare diseases, with second orphan designations falling by nearly 50% after the law’s passage. The broadened exclusion may help to ease these and other concerns. 

Second, CMS has revised how it will calculate Total Expenditures for Part B drugs, one of the criteria for selection. Unlike the draft guidance, the final version incorporates both Medicare Advantage (MA) encounter data and traditional Fee-for-Service (FFS) claims. By combining MA and FFS data, CMS aims to ensure equitable treatment of expenditures in selecting drugs across Parts B and D. 

Third, vaccines for infectious diseases remain eligible for negotiation, but CMS clarified it will identify qualifying vaccines based on antigen components, reflecting the dynamic nature of vaccine development. 

These changes underscore CMS’s effort to balance cost-containment with incentives for innovation. Reiterating the focus on a transparent process, CMS Administrator Dr Mehmet Oz noted: “We’ve listened to stakeholders, and their feedback helped us make the Negotiation Program more transparent, more workable for manufacturers, and more responsive to the needs of Medicare beneficiaries.” 

From 2028, CMS will also conduct the first cycle of renegotiations. Drugs selected in 2026 or 2027 may be revisited if they meet statutory criteria such as loss of monopoly status, new indications, or material changes likely to affect the MFP. All drugs losing monopoly status will be renegotiated, while others will be considered if a revised MFP would represent at least a 15% change with a meaningful impact on Medicare. 

As outlined in the CMS factsheet, the DPNP follows a structured timeline. CMS will publish the list of selected drugs for 2028 by February 1, 2026. Manufacturers must sign participation agreements by February 28 and submit data by March 1. Initial offers will be issued in June, with responses due by July 1, and final offers made by September 30. MFPs will be published by November 30, 2026, taking effect from January 1, 2028. By March 2027, CMS will also publish narrative explanations of how MFPs were determined, balancing transparency with protection of confidential information.