The third cycle of the drug price negotiations will involve drugs under Medicare Part B. New prices are set to take effect in 2028.
The U.S. Centers for Medicare and Medicaid Services will name the next 15 drugs to undergo price negotiations by February 1, 2026, the agency revealed on Monday.
The announcement immediately followed President Donald Trump’s signing of an executive order to revive his Most Favored Nation (MFN) policy, which seeks to lower drug costs and “to bring prices for American patients in line with comparably developed nations,” according to the document. Within 30 days of signing the MFN order, Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare and Medicaid Services Administrator Mehmet Oz, should communicate these new prices to drugmakers.
The CMS on Monday released draft guidance for the third cycle of drug price negotiations under the 2022 Inflation Reduction Act, which will now include drugs payable through Medicare Part B, which mostly refers to services like outpatient care, doctors’ fees and certain tests, but also includes certain drugs given as part of these services, like cancer medicines that are usually not self-administered. In contrast, the first and current rounds of negotiations have only involved Part D, which covers brand-name and generic prescription drugs. The new prices for the next 15 drugs will go into effect in 2028.
The drug negotiation program empowers the CMS to haggle with pharma companies, looking to bring down the maximum fair prices of some of the most widely prescribed prescription drugs.
Of note, the draft document also outlines guidelines the CMS will use in choosing certain drugs eligible for negotiation. Medicines that have already been negotiated but have had added indications and changes in monopoly status, for instance, could be up for renegotiation, with new prices to take effect in 2028. Changes in cost of production and distribution changes since the previous negotiation would not be considered grounds for renegotiation.
The second cycle of the negotiations is ongoing and includes some of the industry’s top-selling drugs, such as Novo Nordisk’s obesity and diabetes drugs Wegovy and Ozempic, GSK’s asthma therapy Trelegy Ellipta and Bristol Myers Squibb’s multiple myeloma medicine Pomalyst. CMS has until June 1 to make its initial offer to drugmakers, which will then accept or file their counteroffer. The final agreed-upon prices will be implemented in 2027.
When Trump won the presidential election last year, the pharma industry was optimistic that he would usher in a pro-industry administration. BMO Capital Markets analysts at the time said that a Trump presidency could be a “modest positive” for the industry, while analysts from Mizuho and Leerink noted the potential for a regulatory environment more accommodating of business combinations.
Trump appeared to make good on this projection last month, indicating in an executive order aimed at lowering drug prices the potential for a change to the so-called “pill penalty,” which gives small molecules only a 9-year window free of Medicare price negotiations compared with the 13-year window afforded biologics.
The latest drug pricing update also comes at a time of tumult in the overall microenvironment. In February, for instance, Kennedy kicked off a sweeping reorganization of HHS, which involved some 3,500 layoffs at the Food and Drug Administration—cuts some have argued could cripple the regulator.
Trump has also threatened the pharma industry with “major” tariffs, which he says could encourage companies to reshore their manufacturing operations. Last month, his Commerce Department opened a national security probe on pharma imports, the results of which could prompt Trump to impose certain trade restrictions on these products.
