TL/DR –
On June 12, 2026, the Centers for Medicare & Medicaid Services (CMS) announced the first proposed rule to implement the Inflation Reduction Act (IRA) Medicare Drug Price Negotiation Program. The rule intends to codify policies related to the program, propose changes and seek feedback to inform further policy development. If the rule is finalized, it will govern the administration of the program beginning with Initial Price Applicability Years 2029, with prior guidance documents controlling for 2026-2028.
Centers for Medicare & Medicaid Services Proposes Rule to Implement the Inflation Reduction Act
On June 12, 2026, the Centers for Medicare & Medicaid Services (CMS) released their first proposed rule for the implementation of the Inflation Reduction Act (IRA) Medicare Drug Price Negotiation Program. The proposal is available here along with a Fact Sheet. The proposal intends to formally adopt policies related to the Program that had been previously included in the guidance, while suggesting several changes and asking for feedback on additional issues for the future development of the policy.
The IRA gives Medicare the power to negotiate prescription drug prices for a specified number of “selected drugs” per year. CMS has been authorized to implement the Program’s requirements for the Initial Price Applicability Years (IPAYs) 2026, 2027, and 2028. The first three cycles of the Program were implemented through agency guidance. With the arrival of IPAY 2029, CMS has begun the process of notice-and-comment rulemaking for the first time under this Program. The Proposed Rule will govern the administration of the Program starting with IPAY 2029.
The Proposed Rule generally adheres to the policies outlined in the previous Program guidance with some notable changes, such as the treatment of certain fixed combination drugs. Public comments on the Proposed Rule are due 60 days after publication in the Federal Register. In a parallel move, CMS is suggesting revisions to the Negotiation Program Drug Selection revised information collection request (ICR) and the Drug Price Negotiation revised ICR. Comments on the ICRs are also due within 60 days.
Key Policy Developments
The primary policy developments of the Proposed Rule include:
- Selection of Drugs for Negotiation: CMS is maintaining the same approach for identifying qualifying single-source drugs. A change from IPAY 2028 includes the proposal to publish a list of up to 30 top negotiation-eligible drugs. CMS will base the selection of drugs on combined total expenditures under Part B and Part D.
- Fixed Combination Drugs: The general policy will effectively treat a fixed combination drug as having a distinct active moiety. However, a proposed modification will result in the aggregation of products with different active moieties if an application holder adds an additional active moiety.
- Orphan Drug Exclusion: CMS will begin the 7- or 11-year selection clock on the first day a drug or biological product no longer meets the criteria for the orphan drug exclusion. This could be the date on which FDA approves the product for a non-orphan indication.
- Plasma-Derived Products: CMS proposes to consider only whether the active moiety/active ingredient is derived from human whole blood or plasma when determining if a product is eligible for the plasma-derived product exclusion.
- Bona Fide Marketing of Generic and Biosimilar Drugs: CMS will determine that a generic or biosimilar product is marketed, such that the reference product is not a QSSD or should be disqualified or removed from the Program, only if there is more than solely token or de minimis availability of the generic or biosimilar product.
- Negotiation Process and MFP Calculations: CMS broadly retains the same policies for the negotiation process. However, CMS is suggesting a new methodology for calculating the 30-day equivalent supply for products that are typically administered once in a lifetime (e.g., certain gene therapies, oncology products, or vaccines).
- Compliance and Enforcement: CMS is proposing additional requirements for Primary Manufacturers to transfer a selected drug to a third party. This includes providing CMS with documentation of the intended transfer of responsibility for all requirements of the Negotiation Program Agreement to the acquiring entity.
- Renegotiation Process: CMS proposes that the Primary Manufacturer submit the most recent agreed-upon MFP as part of the data submission requirement for drugs selected for renegotiation.
The Proposed Rule should be considered within the context of broader drug pricing policies at the federal and state levels. The implications for the following drug pricing policies and programs include: MFN (GLOBE/GUARD Models), 340B Program, Best Price in Medicaid Drug Rebate Program, ASP, and State Drug Pricing Laws.
Comments on the Proposed Rule are due by 5:00 p.m. on the date that is 60 days after the date of publication in the Federal Register.
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