Medicare’s drug price negotiation program now has permanent rules. The Centers for Medicare & Medicaid Services (CMS) issued a final rule on Thursday, Nov. 5, that writes the program’s procedures into federal regulation for negotiated prices taking effect in 2029 and later years, and it set the next deadline: by Feb. 1, 2027, the agency will pick up to 20 more high-cost drugs for the fourth round of negotiations.
Until now, CMS ran the program through guidance documents, as the Inflation Reduction Act of 2022 directed for the first three negotiation cycles. That authority is expiring, so the agency is codifying the rules for 2029 and beyond, according to the CMS fact sheet. The rule takes effect Dec. 5, 2026, and is available in the Federal Register.
What does the new Medicare drug price rule do?
The rule turns policies CMS has used since the program began into permanent regulations. It covers how drugs are identified and selected, what drug makers must submit, how CMS builds and explains its offers, and how negotiated prices, which the law calls maximum fair prices, are published and enforced.
CMS said the rule is meant to give participating manufacturers “greater predictability” while it continues negotiating prices for high-cost drugs. The agency also said it is adding requirements for the fourth and later cycles with “a particular focus on continuing to increase transparency” in the program.
Which drugs could be picked next, and when?
CMS will select up to 20 drugs covered under Part D or paid under Part B by Feb. 1, 2027, for what it calls initial price applicability year 2029. It may also select drugs that were already negotiated in the first three cycles for renegotiation, if they meet the eligibility criteria. CMS has not named the drugs yet.
According to the agency’s timeline, CMS plans patient-focused roundtables and at least one clinical town hall in spring 2027. It must send initial offers by June 1, 2027, final offers by Sept. 30, 2027, and publish any agreed-upon prices by Nov. 30, 2027. Those prices would take effect Jan. 1, 2029.
Earlier rounds are already moving. Negotiated prices for the first 10 Part D drugs took effect Jan. 1, 2026, and prices for 15 more Part D drugs from the second cycle take effect Jan. 1, 2027, according to CMS’s selected drugs page. Negotiations on the third cycle’s 15 drugs, which for the first time include drugs paid under Part B, are taking place this year for prices starting in 2028.
What is the fixed-combination drug loophole?
The rule finalizes a policy CMS proposed in June aimed at what it describes as a program integrity risk. Under the earlier policy, a drug maker could market a new version of a product that adds another active ingredient and a different way of taking the medicine, and that new version would be treated as a separate drug.
CMS said that approach could let a manufacturer “avoid selection” or avoid the negotiated price by moving patients to the new formulation. Under the final rule, CMS will treat certain of these fixed-combination products as new formulations of the existing drug, so they are counted together with the original when drugs are identified for negotiation.
What changes for Part D plans and pharmacies?
The rule codifies two Part D requirements that come from the law. Part D plans must include selected drugs that have a negotiated price in effect on their formularies, and the price plans pay pharmacies and other dispensing entities for those drugs can be no higher than the negotiated price plus any dispensing fees. The fact sheet notes that plans may still remove a selected drug from a formulary in situations already allowed under existing Part D rules.
The rule also implements a Temporary Floor for Small Biotech Drugs, as the law requires. For eligible small-biotech drugs in 2029 and 2030, CMS cannot offer or accept a counteroffer below a set minimum price.
What does this mean for people with Medicare?
For now, the rule does not change what anyone pays at the pharmacy counter. Its main effect is to lock in how future negotiations will work. People who take drugs negotiated in the second cycle should watch for those prices to apply starting Jan. 1, 2027, and anyone comparing 2027 Part D plans during open enrollment, which ends Dec. 7, can check whether their medicines are on each plan’s list. HNC’s open enrollment checklist and our report on projected 2027 Part D premium changes can help.
Key Takeaways
- CMS issued a final rule on Nov. 5, 2026, making the Medicare Drug Price Negotiation Program’s procedures permanent for prices effective in 2029 and later; the rule takes effect Dec. 5, 2026.
- By Feb. 1, 2027, CMS will select up to 20 more Part D or Part B drugs for the fourth negotiation cycle, and may pick earlier drugs for renegotiation.
- Agreed-upon prices from that cycle must be published by Nov. 30, 2027, and would take effect Jan. 1, 2029.
- A new policy closes what CMS calls a fixed-combination drug loophole that could let a maker avoid a negotiated price with a reformulated product.
- Part D plans must cover selected drugs with negotiated prices, and pharmacies are paid no more than that price plus dispensing fees.
Frequently Asked Questions
When does the new Medicare drug negotiation rule take effect?
The final rule, issued by CMS on Nov. 5, 2026, takes effect Dec. 5, 2026. It applies to negotiated prices starting in 2029.
How many drugs will Medicare negotiate next?
CMS will select up to 20 drugs covered under Part D or paid under Part B by Feb. 1, 2027, and may also select previously negotiated drugs for renegotiation.
When will the next negotiated prices take effect?
Prices agreed in the fourth cycle must be published by Nov. 30, 2027, and take effect Jan. 1, 2029. Prices from the second cycle, covering 15 Part D drugs, take effect Jan. 1, 2027.
Will this rule lower my drug costs right away?
No. The rule sets the permanent process for future negotiations. It does not change current prices or copays on its own.
Can patients give input?
Yes. CMS plans patient-focused roundtables and at least one clinical town hall in spring 2027 and says it will share details later.
Featured image: Capsules spilling from a bottle. (NIAID, CC BY 2.0, via Wikimedia Commons)
