Initial Guidance Established for Medicare Drug Price Negotiation Program for Price Applicability Year 2026

For the first time, Medicare will have the ability to negotiate lower prescription drug prices because of the Inflation Reduction Act, a law that lowers healthcare and prescription drug costs after the U.S. Department of Health and Human Services, through the Centers for Medicare and Medicaid Services (CMS), issued initial guidance detailing the requirements and parameters on key elements of the new Medicare Drug Price Negotiation Program for 2026, the first year the negotiated prices will apply. Alongside other provisions in the new drug law, the Medicare Drug Price Negotiation Program will strengthen Medicare’s ability to serve people currently in Medicare and for generations to come.

This initial guidance is one of a number of steps CMS laid out in the Medicare Drug Price Negotiation Program timeline for the first year of negotiation. The initial program guidance details the requirements and procedures for implementing the new program for the first set of negotiations, which will occur during 2023 and 2024 and result in prices effective in 2026. Key dates for implementation include:

• By Sept. 1, 2023, CMS will publish the first 10 Medicare Part D drugs selected for initial price applicability for year 2026.
• The negotiated maximum fair prices for these drugs will be published by Sept. 1, 2024, and prices will be in effect starting Jan. 1, 2026.
• In future years, CMS will select for negotiation up to 15 more Part D drugs for 2027, up to 15 more Part B or Part D drugs for 2028, and up to 20 more Part B or Part D drugs for each year after that, as outlined in the Inflation Reduction Act.

“Drug price negotiation is a critical piece of how this historic law improves the Medicare program,” said CMS Administrator Chiquita Brooks-LaSure. “By considering factors such as clinical benefit and unmet medical need, drug price negotiation intends to increase access to innovative treatments for people with Medicare.”