CMS moves to close a Medicare drug pricing loophole

Medicare beneficiaries may never see the paperwork, but they could feel the difference if a reformulated drug slips out of the pricing rules. In Washington, the Centers for Medicare & Medicaid Services, or CMS, is proposing a narrow fix for certain fixed-combination drugs that are turned into new formulations, because those changes can create a program-integrity risk inside the Medicare Drug Price Negotiation Program.

The concern is straightforward: if a manufacturer changes the formulation, a drug might avoid selection or maximum fair price, or MFP, application. CMS says the proposal is meant to stop that from happening without rewriting the broader rules for combination products.

Keeping the price rules attached

The change centers on proposed Sec. 429.125(b)(4)(i), where CMS would spell out how new formulations are treated when the statute and the general fixed-combination drug policy do not line up neatly. The agency says that tension can arise when a drug has already been selected for the negotiation program, then comes back in a different form.

CMS is describing the update as narrow, not sweeping. It would apply to certain fixed-combination drugs that are new formulations, and the goal is to keep the Medicare Drug Price Negotiation Program working as intended within the Part D framework.

Why the gap matters

For drug makers, the proposal matters because formulation changes can affect whether a product stays inside Medicare’s pricing system. For Part D plans, it matters because the list of drugs tied to government pricing rules helps shape what gets covered and what Medicare pays.

For beneficiaries, the practical promise is simpler than the legal language: a drug should not get a fresh escape hatch just because its formulation changed. CMS says the fix is meant to preserve the program’s leverage so selected drugs do not avoid negotiation or MFP treatment by changing their design.