Medicare’s drug price negotiation program is progressing into its third round of selections, HHS announced last week. And as the Biden-era program moves full steam ahead, changes are in store for the next 15 drugs that will end up on the negotiating table.
CMS has already negotiated prices for the first 10 drugs pulled into the program, which will kick in next year, and the agency is now haggling with drugmakers over medications that will be a part of the second cycle that’s slated for implementation in 2027.
Now, the bell is ringing for round three. And despite President Donald Trump’s other efforts to tackle drug pricing, including a new executive order issued last week, the administration is planning a “continuation” of the negotiating program that will stay in line with the Inflation Reduction Act’s original provisions.
The Trump administration has offered a handful of concessions to the pharma industry, however, including more opportunities for contact with CMS, as well as increased transparency in the negotiation and selection process.
Here are the latest developments with the negotiation program.
Round three on the way
The 15 drugs picked by CMS for negotiations in the 2028 plan year will be announced by Feb. 1, 2026, the agency said last week. It also released draft guidance outlining the agency’s aims to improve transparency, prioritize drugs with high cost to Medicare and minimize disruptions to innovation.
One new aspect of the third round is the inclusion of Medicare Part B drugs, which are typically administered in a doctor’s office or hospital. A rule that allows small biotechs to apply for an exemption of certain drugs will extend to the Part B medications, CMS said.
The third cycle will also enable CMS to renegotiate prices from the first two plan years for the first time. Renegotiations may include drugs that received new indication approvals since the maximum fair price was assessed or a change in monopoly status. The draft guidance is open for public comment through June 26.
In the draft guidance, CMS proposed publishing a list of the 50 drugs most eligible for negotiation based on their combined Part B and Part D expenditures, potentially offering a look into which drugs will be selected down the line.
Second round advances
With the third cycle teed up, second round negotiations are ongoing. Fifteen more Medicare Part D drugs were selected in January for the 2027 plan year, including Novo Nordisk’s popular GLP-1 weight loss and diabetes drugs Ozempic and Wegovy — a choice that was anticipated by analysts. As of mid-March, CMS had signed agreements with all manufacturers involved, initiating the negotiation process that is scheduled to wrap Nov. 1.
HHS also held a town hall meeting last month in which clinicians, researchers and other stakeholders commented on the selected drugs and negotiation process. While cooperating with CMS, Novo Nordisk is also fighting against the program. The Danish drugmaker sued CMS in 2023, but has so far been unsuccessful in its pursuit to stop the negotiations as judges have sided with the health agencies.
CMS will send out its first offer of new prices to manufacturers by June 1, and drugmakers will have 30 days to respond with a counter offer. Drugmakers will also have the opportunity to meet with CMS during this period and have up to two more negotiation rounds if an agreed-upon price is not reached before Nov. 1.
Drugmakers and industry lobbyists are also hoping lawmakers will overturn what has become known as the small molecule penalty. Per the IRA, small molecule drugs are eligible for negotiation nine years after approval, while biologics are afforded 13 years before they can be selected for the program. Industry advocates have maintained that the rule disincentivizes small molecule R&D and stifles innovation. Congress introduced a bill to overturn the rule, and Trump included the fix in an executive order last month, but the change hasn’t been approved by lawmakers yet.
Regulatory confusion
As the negotiation program moves ahead, Trump also aims to reduce drug prices from another angle. He reintroduced a “most favored nation” policy in an executive order last week, requiring HHS to implement a direct-to-consumer approach that would enable Americans to buy drugs directly from manufacturers at a price that matches the cost in other countries. Trump initiated the policy for certain Medicare Part B drugs during his first term, but the plan didn’t hold up against legal challenges from the pharma industry.
It’s unclear how the most favored nation policy would work alongside Medicare price negotiations, but the executive order suggests the Trump administration believes that savings from the IRA haven’t gone far enough. During a press conference unveiling the most favored nation policy last week, government health officials presented a chart of 10 drug prices in the U.S. vs. Europe after the government completed negotiations for Medicare.
“The administration appears to be signaling its dissatisfaction with the price reductions achieved through the first round of IRA negotiations and its belief that MFN is a better approach,” Rachel Turow, an FDA regulatory lawyer at Skadden, and Avia Dunn, partner at Skadden, wrote in a blog post last week.
At the same time, the Trump administration is pushing for fewer regulations in general and issued an executive order requiring agencies to cut 10 regulations for every new one implemented. HHS and the FDA recently announced a public request for information to determine which “unnecessary” regulations have to be eliminated. Healthcare groups such as the American Hospital Association have already jumped at the opportunity, suggesting regulatory cuts to administrative requirements. HHS has also begun rescinding regulatory documents, including four guidances.
