CMS proposes codifying, strengthening Medicare drug price negotiations 

CMS proposes codifying, strengthening Medicare drug price negotiations 

The Centers for Medicare and Medicaid Services (CMS) is proposing changes to the Medicare Drug Price Negotiation Program that would codify the requirements of the program and close a potential loophole that drugmakers could exploit. 

© Jenny Kane, The Associated Press

Established by the Inflation Reduction Act (IRA), the Medicare Drug Price Negotiation Program is currently carried out through guidance documents. Unlike a federal rule, guidance is nonbinding and open to interpretation. Codifying these requirements would essentially make it harder to challenge the program. 

If approved, these codified rules would direct negotiations beginning in 2029. 

CMS’s proposal would codify the process through which drugs are selected for Medicare negotiation as well as the requirements placed on the manufacturers of the chosen medications. 

The proposal also makes note of a potential loophole that drugmakers could take advantage to escape Medicare negotiation. Drugmakers could theoretically change one ingredient in their product, separate from the active pharmaceutical ingredient, or change how it’s administered and market it as something new to make it ineligible for negotiation. 

To address this potential loophole, CMS is proposing that two different products with the same active ingredient can be equally considered for Medicare negotiation if the license holder is the owner of both products and the new formulation is just meant to create a new route of administration. 

The 60-day comment period on the rule will close on Aug. 17, 2026.

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