CMS Releases Draft Guidance for 2028 Medicare Drug Price Negotiations: What It Means for You

On May 12, 2025, the Centers for Medicare & Medicaid Services (CMS) released its draft guidance for the third cycle of the Medicare Drug Price Negotiation Program, a key component of the Inflation Reduction Act (IRA). This new guidance marks a significant expansion of Medicare's ability to control prescription drug costs — including, for the first time, drugs covered under Medicare Part B.

The changes are poised to reshape how high-cost drugs are priced and paid for in Medicare, with sweeping implications for beneficiaries, providers, and manufacturers alike. Here’s what you need to know.

Key Highlights from the May 12, 2025 Guidance

1. Inclusion of Medicare Part B Drugs

For the first time, CMS proposes including drugs reimbursed under Medicare Part B in the negotiation process. These are typically physician-administered drugs, such as infusion therapies, cancer drugs, and injectable biologics.

This inclusion marks a major policy shift, allowing Medicare to negotiate prices for some of the most expensive drugs in the system — a move aimed at achieving significant cost savings.

2. Third Cycle of Medicare Drug Price Negotiations

The guidance launches the third round of drug selections under the IRA. CMS will identify up to 15 high-spending drugs — from both Part D and Part B — that lack generic or biosimilar competition.

• February 1, 2026: CMS will announce the selected drugs.

• Fall 2026: CMS and manufacturers will engage in confidential negotiations.

• November 30, 2026: Negotiated Maximum Fair Prices (MFPs) will be published.

• January 1, 2028: New prices will take effect.

3. Renegotiation of Previously Selected Drugs

CMS outlines how it may renegotiate previously selected drugs. This will occur when new data, indications, or economic conditions warrant a revision to the original pricing agreement. The goal is to keep prices aligned with clinical value and real-world usage.

4. Maximum Fair Price (MFP) Implementation

CMS provided expanded details on how MFPs will work in practice:

• Drug manufacturers must sign a pricing agreement with CMS.

• MFPs will be the maximum allowable price for Medicare and will be publicly disclosed.

• Manufacturers that do not comply will face stiff penalties, including excise taxes and potential exclusion from Medicare and Medicaid.

5. Public Comment Period

CMS is accepting public comments on the draft guidance through June 26, 2025. Stakeholders are encouraged to provide input on methodologies, selection criteria, and implementation logistics — particularly regarding the inclusion of Part B drugs.

What This Means for Stakeholders

For Medicare Beneficiaries

• Lower Drug Costs: The expansion of negotiation to high-cost Part B drugs could significantly reduce out-of-pocket expenses.

• Greater Access: Lower costs may lead to better medication adherence and improved health outcomes.

• Transparent Pricing: With public MFPs, patients will have a clearer sense of what they’ll pay.

For Healthcare Providers

• Operational Changes: Practices may need to adjust billing processes and reimbursement expectations for Part B drugs.

• Care Access: Providers may see fewer cost-related treatment delays or denials.

• Revenue Considerations: Payment changes for Part B drugs could impact margins in provider-administered settings.

For Pharmaceutical Manufacturers

• Revenue Impact: Inclusion in negotiation could lead to significant price reductions for legacy drugs without competition.

• Compliance Burden: Non-participation triggers excise taxes up to 1,900% of daily drug revenue, plus potential federal program exclusion.

• Strategic Shifts: Manufacturers may consider adding generics or biosimilars to their portfolio for specific brands, disqualifying them from price negotiations.

For Medicare Plans (Part D and Medicare Advantage)

• Formulary Updates: Plans will need to realign formularies and tier structures to incorporate MFPs.

• Premium Stability: Lower negotiated drug costs may result in more stable or even reduced premiums over time.

• Administrative Planning: Plans must prepare to implement new prices on schedule while maintaining beneficiary access and compliance.

What’s Next?

This draft guidance is part of CMS’s broader effort to ensure affordable prescription drug access through the tools granted by the Inflation Reduction Act. With the public comment window now open, the agency is actively seeking feedback from all sectors — patients, providers, payers, and industry.

The final guidance will be released later in 2025, and the third cycle of negotiations will officially begin in early 2026.

How to Participate in Public Comment

To read the full draft guidance and submit a comment, visit: CMS Inflation Reduction Act Guidance Portal

Stay tuned for more updates on Medicare pricing reform. Have questions or want to discuss what this means for your organization? Contact us today.