Regulatory NewsBREAK: CMS Issues Final Guidance on Medicare Drug Price Negotiation Program

On September 30, 2025, the Centers for Medicare and Medicaid Services (CMS) issued final guidance for the third cycle of the Medicare Drug Price Negotiation Program for Initial Price Applicability Year (IPAY) 2028. Negotiations for the Maximum Fair Prices (MFP) on up to 15 additional negotiation-eligible Part D and/or Part B drugs will occur in 2026, with the MFP effective in IPAY 2028.

Key updates include:

• Renegotiation of select drugs initially negotiated for IPAY 2026 or 2027, including identifying drugs for renegotiation and the requirements for the renegotiation process. 
• Requirements for the Small Biotech Exception (SBE) and Biosimilar Delay, including SBE requests for Part B drugs or biological products, requests for a second year of Biosimilar Delay, and rebates when a biosimilar does not enter the market as expected. 
• For vaccines for infectious diseases, a qualifying single source drug includes all dosage forms and strengths of the vaccine with the same antigen component(s) and the same biologics license application (BLA) holder, even if marketed under different BLAs. 
• The orphan drug exclusion has been revised in line with the Working Families Tax Cuts Act, expanding eligibility and clarifying the timing for the seven- and eleven-year exclusion periods. CMS will exclude a drug or biological product that is designated as a drug for one or more rare diseases or conditions and for which the only approved indication (or indications) is for one or more such rare diseases or conditions. 
• The 11-digit National Drug Code (NDC-11) package price will be removed from the public MFP file. 

CMS will publish the list of drugs selected for renegotiation by February 1, 2026.

• CMS plans to address program integrity risks and may propose new policies for 2029.
• Policies for 2027 and 2028 address exceptions to the requirement that certain drugs must be included in Part D formularies.