Medicare's drug-price negotiation program would get a fuller rulebook

A federal proposal published June 16 would give Medicare’s drug price negotiation program a more durable home in federal regulations. The Centers for Medicare & Medicaid Services, or CMS, says it wants to codify the Medicare Drug Price Negotiation Program and add related policies for the Medicare Prescription Drug Benefit Program, better known as Part D.

That matters because the negotiation program is not just a pricing exercise. It sits inside the part of Medicare that helps cover prescriptions for millions of people. The rules CMS writes can shape which drugs plans must include, how negotiated prices are used and how manufacturers respond when a drug is selected for a lower price.

The proposal is tied to the Inflation Reduction Act of 2022, which created the negotiation framework. CMS says it is now moving from launch-era guidance to a more complete rulebook. For patients, plans and drugmakers, that means the program would be governed less by temporary instructions and more by standing regulations.

What CMS wants to lock in

CMS says it would add a new Part 429 to the Code of Federal Regulations for the negotiation program and revise Part 423, which covers Medicare’s prescription drug benefit. In plain language, the agency is trying to fit the negotiation system more tightly into the normal machinery of Medicare drug coverage.

The agency says the final version would apply starting with the initial price applicability year 2029 and the years after that. That is the next major cycle for selection and renegotiation under the program, so the rules CMS is writing now are meant to govern that round and the ones that follow.

The proposal also makes clear that CMS is not treating the negotiation program as separate from the rest of Medicare drug policy. Instead, it is trying to line up the pricing rules with the coverage rules that Part D plans already follow. That is where many of the practical effects would show up.

How Part D plans would have to respond

One of the clearest changes in the proposal deals with what Part D plans would have to cover. CMS says plan sponsors would have to include each Part D drug that is a selected drug when a maximum fair price, or MFP, is in effect for that year. The proposed rule also says formularies would have to include all covered dosage forms and strengths of a selected drug when the MFP applies.

That sounds technical, but the point is straightforward. If Medicare has selected a drug for negotiation and a lower federal price is in place, Part D plans would need to treat that drug inside the framework CMS sets. They would not be free to ignore the selected version or carve out the covered forms and strengths that fall under the negotiated price.

CMS also proposes to identify a single price for each selected drug, including drugs that come in more than one dosage form or strength. In practice, that creates a clearer payment target for plans and manufacturers. It also makes it easier for Medicare to say which price applies when the drug is dispensed.

The payment rule matters at the pharmacy counter, too. Under the law CMS cites, the negotiated price used for payment would not be allowed to exceed the MFP for the drug, plus any dispensing fees. For people with Medicare, that is where the policy becomes tangible. The price in the program would not just be a number on paper. It would be the number the system has to use when the drug is paid for under Part D.

A check on product changes that could sidestep the rule

CMS also wants to modify its fixed-combination drug policy. These are drugs that combine active ingredients into one product. The agency says it sees a program integrity risk when a manufacturer changes a drug’s formulation in a way that could help it avoid selection for negotiation or avoid the lower price after selection.

The example CMS gives is a new formulation that adds an ingredient, such as hyaluronidase, to enable a different route of administration. The concern is not simply that a drug changes over time. It is that a manufacturer could make a narrow product adjustment and still try to keep the drug outside the negotiation program, or outside the MFP once it has been selected.

CMS says the policy change is meant to address that kind of workaround. The goal is to keep the negotiation system focused on the underlying drug, not just on packaging or delivery changes that leave the core medicine essentially the same. For drugmakers, that means the program would be harder to avoid through reformulation alone.

This part of the proposal is important because it shows where CMS thinks the pressure points are. The agency is not only building rules for selection and pricing. It is also trying to prevent companies from using product design changes to sidestep the program’s reach.

More transparency around which drugs are in play

CMS is also proposing more public information about how drugs are chosen for negotiation. For the 2029 cycle and after, the agency says it would publish a list of up to thirty top negotiation-eligible drugs, including up to twenty selected drugs. The list would be ranked by combined total expenditures under Part B and Part D.

That detail matters because it gives the public a better sense of which medicines CMS is looking at, and why. Part B generally covers drugs given in doctor offices or clinics, while Part D covers retail prescription drugs. Looking at both together can give a fuller picture of how much Medicare is spending on a drug overall.

CMS also says it would make available the National Drug Codes, or NDCs, and Healthcare Common Procedure Coding System, or HCPCS, codes for the drugs on that list when it can do so. Those codes help identify specific products and billing categories. For plans, manufacturers and analysts, that could make the selection process easier to track.

The proposal suggests CMS wants the negotiation program to be more legible from the outside. That does not change the basic pricing mechanics, but it would give people a better view of which drugs are under consideration and how the agency is comparing them.

What the enforcement side looks like

The proposal also sits alongside the law’s enforcement tools. CMS cites civil monetary penalties for manufacturers that fail to provide access to a price at or below the MFP, fail to pay a required rebate in a delayed-biosimilar case, violate certain terms of the negotiation agreement, or provide false information.

That enforcement structure helps explain why the rulemaking matters beyond Medicare paperwork. A negotiated price only works if manufacturers actually provide it and plans apply it correctly. Without enforcement, the program would be much easier to ignore or delay.

For people with Medicare, the changes may not be visible all at once. The biggest effects would likely show up when a selected drug reaches a plan’s coverage rules and a pharmacy claim has to be processed. For drugmakers, the proposal points toward a tighter, more formal system with fewer gray areas. For Part D plans, it means the coverage rules they build would have to line up more closely with the federal price-setting framework.

In that sense, the proposal is less about a single drug than about the structure around many drugs. CMS is trying to turn a new federal pricing program into a steady part of Medicare’s prescription drug benefit, with clearer rules for selection, coverage, payment and enforcement.