Medicare Makes Drug Price Negotiations Permanent in Final Rule
The Centers for Medicare & Medicaid Services has issued a final rule that makes Medicare’s drug price negotiation programme permanent, replacing the temporary guidance the agency has used since the programme began.
CMS announced the rule, known as CMS-4215-F, on Thursday, Nov. 5. It codifies the policies governing the Medicare Drug Price Negotiation Program for prices taking effect in 2029 and later years, and it takes effect on Dec. 5, 2026. The rule is scheduled for publication in the Federal Register on Nov. 9.
The programme was created by the Inflation Reduction Act of 2022, which directed CMS to negotiate what the law calls maximum fair prices for certain high-cost, single-source drugs. For the first three negotiation cycles, covering prices in 2026 through 2028, Congress required the agency to run the programme through guidance documents rather than formal regulation. That authority is now expiring, and the final rule writes the procedures into federal regulation.
What the rule locks in
The final rule covers how CMS identifies and selects drugs for negotiation, what information drug makers must submit, how the agency builds and explains its offers, and how negotiated prices are published and enforced. CMS said the permanent framework would give participating manufacturers greater predictability while “supporting continued innovation”.
The rule does not change what Medicare beneficiaries pay for medicines today. No drug prices or copays move as a direct result of the rule itself; it sets the process for future negotiations, with the first prices under the permanent framework taking effect on Jan. 1, 2029.
Up to 20 more drugs to be chosen by February
The next milestone comes quickly. By Feb. 1, 2027, CMS will select up to 20 additional drugs covered under Medicare Part D, payable under Part B, or both, for the programme’s fourth negotiation cycle. The agency will also select drugs for renegotiation where appropriate.
Negotiations will take place during 2027. The agreed maximum fair prices from that cycle must be published by Nov. 30, 2027, and will take effect on Jan. 1, 2029.
A new rule on combination drugs
The final rule also goes beyond codifying existing practice. It finalises a policy on fixed combination drugs, under which CMS will treat certain new formulations as part of the original product when they come from the same drug application holder and an added ingredient enables a new route of administration — for example, adding hyaluronidase so a drug given by intravenous infusion can instead be injected under the skin.
The provision has already drawn attention from the pharmaceutical industry. Bloomberg Law reported that the policy could open the door to fresh legal challenges from drug makers, because it allows CMS to extend negotiated prices to newer versions of a drug where the agency finds no clinically meaningful difference from the original.
The rule also clarifies how CMS measures the seven- and 11-year periods since a drug’s approval or licensure for drugs that previously qualified for the orphan-drug exclusion, following amendments in legislation passed on July 4, 2025.
Industry reaction
Some companies moved quickly to assess the impact. Halozyme Therapeutics said on Nov. 6 that it expects zero to minimal impact on its royalty revenue through at least 2035 after analysing the final rule, reaffirming an assessment it first gave in June when CMS proposed the rule.
Hospitals had pushed for a stronger provision during the public comment period. The American Hospital Association urged CMS in comments filed on Aug. 17 to require drug makers to make the maximum fair price available at the point of sale, rather than through retrospective rebates.
What happens next
The announcement lands as the wider health system keeps shifting. Open enrollment for 2027 health coverage is under way, with premiums on Affordable Care Act plans rising 13 percent, while the FDA has fast-tracked a sleep drug for children with insomnia and CVS Health has said it will split its pharmacy and insurance businesses by 2028.
With the framework now permanent, the programme’s focus shifts to the fourth cycle. CMS will name its next round of drugs by Feb. 1, 2027, and the negotiations that follow will determine the prices Medicare pays for some of its most expensive medicines from 2029 onward. For the tens of millions of Americans covered by Medicare, the effect will be felt not in this rule, but in the prices it produces.
