CMS Issues Final Rule on the Medicare Drug Price Negotiation Program and Medicare Prescription Drug Benefit Program

On November 5, 2026, the Centers for Medicare and Medicaid Services issued a final rule on the Medicare Drug Price Negotiation Program and Medicare Prescription Drug Benefit Program (Final Rule).

• The Final Rule codifies existing policies from guidance for the Negotiation Program into regulatory text.
  • Policies being codified include how CMS identifies qualifying single source drugs, ranks negotiation-eligible drugs, and publishes the selected drug list.
  • The rule also addresses requirements for manufacturers of selected drugs, including signing the Negotiation Program Agreement no later than February 28 following the selected drug publication date. The agreement remains in effect through renegotiation, as applicable. It continues until the drug is no longer considered a selected drug because CMS determines that an approved generic drug or licensed biosimilar is subject to Bona Fide Marketing. However, the Primary Manufacturer may terminate the agreement earlier under specified conditions.
• The Final Rule establishes a policy for specific fixed combination drugs that CMS determines are new formulations of existing drugs.
  • For products held by the same New Drug Application (NDA)/Biologics License Application (BLA) holder, this policy applies when CMS determines that differences in active moieties, active ingredients, or antigen components result from adding a component that both creates a new formulation and enables an alternative route of administration for the co-administered active moieties, active ingredients, or antigen components.
  • CMS then identifies the potential qualifying single source drug using all dosage forms and strengths of the shared active moieties, active ingredients, or antigen components offered by that NDA/BLA holder.
• For drugs that formerly qualified for the Orphan Drug Exclusion, the Final Rule clarifies when the negotiation eligibility clock starts. Generally, at least 7 years must elapse after FDA approval of a small-molecule drug, or 11 years after FDA licensure of a biologic, before the selected drug list is published. These are minimum timing requirements for consideration, not a guarantee of selection.
• The Final Rule codifies the process and schedule for CMS to determine whether a manufacturer is engaged in Bona Fide Marketing of an approved generic drug or licensed biosimilar. Approval or licensure alone does not end a drug’s selected-drug status. CMS must also determine that the generic drug or biosimilar is subject to Bona Fide Marketing. That determination affects how long the drug remains subject to the Negotiation Program Agreement.
• For a selected drug or therapeutic alternative payable under Part B that is typically administered only once, such as some vaccines, gene therapies, and cancer therapies, CMS explains how it will calculate a 30-day equivalent supply.
• For initial price applicability years (IPAY) 2029 and 2030, CMS explains how it will implement the Temporary Floor for Small Biotech Drugs. The calculation issue arises when certain ceiling amounts for a selected drug are below that temporary floor. To address this situation, CMS is modifying its proposed stepwise approach for calculating the selected drug’s ceiling.
• The Final Rule clarifies when off-label use may be considered in determining renegotiation eligibility and selection. It aligns these policies with the initial offer development process.
• The Final Rule is effective December 5, 2026 and is applicable to the Negotiation Program beginning with respect to IPAY 2029 and to Part D Program coverage beginning January 1, 2029.

More on This Topic:

Final Rule
CMS Press Release
CMS Fact Sheet
CMS Initial Price Applicability Year 2029 Key Milestones and Timeline

 For questions, please reach out to Geni Tunstall.