WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services has proposed a permanent regulatory framework for Medicare’s Drug Price Negotiation Program, a move that would formalize how the government negotiates prices for high-cost prescription drugs while expanding future negotiations that could affect millions of Medicare beneficiaries.
The proposed rule would transition the program from guidance-based implementation to a codified regulatory structure beginning with negotiations for drugs whose negotiated prices would take effect in 2029. CMS said the change is intended to provide greater predictability for drug manufacturers, health plans, pharmacies, and Medicare beneficiaries.
The proposal comes as the agency prepares for the fourth cycle of negotiations under the program, during which CMS will select up to 20 additional eligible drugs covered under Medicare Part B and Part D.
The Medicare Drug Price Negotiation Program was created under federal law to allow Medicare to negotiate prices for certain high-expenditure, single-source prescription drugs. CMS said it has already negotiated prices for 25 drugs during the program’s first two years.
Maximum Fair Prices for the first 10 negotiated drugs took effect Jan. 1, 2026, reducing costs for some Medicare beneficiaries purchasing those medications.
Under the proposed rule, CMS would establish policies governing both initial negotiations and future renegotiations of eligible drugs. The agency is also proposing revisions to how qualifying single-source drugs are identified, citing potential program integrity concerns involving certain drug reformulations.
CMS said the changes are designed to improve consistency, strengthen oversight, and ensure compliance with statutory requirements.
The proposal would also implement a temporary pricing floor for certain small biotechnology companies, as required by law. The provision would prevent CMS from negotiating or accepting prices below specified thresholds for qualifying small biotech drugs during the 2029 and 2030 price applicability years.
CMS said the policy is intended to balance cost-saving objectives with incentives for pharmaceutical innovation.
The rule would also formally establish requirements affecting Medicare Part D prescription drug plans. Under the proposal, Part D plans would be required to include selected drugs with negotiated prices on their formularies, and negotiated payments to dispensing entities could not exceed the Maximum Fair Price plus applicable dispensing fees.
CMS Administrator Dr. Mehmet Oz said the proposal would move the program from annual updates to a long-term regulatory structure.
“We are moving from annual updates to a permanent, predictable framework,” Oz said. “This approach puts patients first, strengthens Medicare, and protects the innovation pipeline that delivers future cures.”
Chris Klomp, director of Medicare and chief counselor at the Department of Health and Human Services, said the proposal is intended to provide greater certainty as the program expands.
“This rule builds on that foundation by establishing clear, consistent rules of the road—giving patients, plans, pharmacies, and drug manufacturers the certainty they need as we continue to drive down costs,” Klomp said.
CMS said it has also developed operational infrastructure to support the program, including the Medicare Transaction Facilitator system used to implement negotiated pricing agreements.
The proposed rule is available through the Federal Register at https://www.federalregister.gov/public-inspection/current.
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