Medicare drug price negotiation entered a new phase on November 5, 2026, when CMS issued a final rule for 2029 and later. It takes effect December 5, 2026.
The rule formalizes the Medicare Drug Price Negotiation Program in federal regulations. CMS says the new framework will apply beginning with the 2029 initial price applicability year. Prices for that year have not been negotiated or announced.
The rule was filed for public inspection on November 5 and is scheduled for publication in the Federal Register on November 9. Its 695 pages set out requirements for selecting drugs, negotiating maximum fair prices, and administering the program. The CMS fact sheet summarizes the changes. The Federal Register document contains the rule text.
What CMS Finalized
The Inflation Reduction Act of 2022 established the program. It authorizes CMS to negotiate maximum fair prices, or MFPs, for certain high-expenditure, single-source drugs and biological products covered by Medicare Part D and/or Part B.
For the first three price applicability years, the law directed CMS to implement the program through guidance. That authority expires after 2028. The final rule codifies the program’s operating requirements for 2029 and subsequent years.
CMS may select up to 20 drugs for negotiation for 2029 and each later year. Eligible drugs may be covered under Part D, payable under Part B, or both. CMS may also select some previously negotiated drugs for renegotiation if they meet the applicable criteria.
Codification gives the program a continuing regulatory framework beyond the period when implementation was directed through guidance. It does not make the rules unchangeable: regulations can be amended through future rulemaking, and Congress can change the governing statute.
What the New Rules Cover
The final rule codifies procedures for identifying eligible and selected drugs, manufacturer agreements, negotiation offers and counteroffers, and circumstances in which a drug may be removed from the program. Manufacturers must sign a negotiation agreement no later than February 28 after publication of a selected-drug list, under the codified requirements.
Several policies address how the program will work in practice:
- New formulations: In specified circumstances, CMS will aggregate certain products from the same manufacturer when a new formulation adds an ingredient that enables a different route of administration. This is intended to prevent a manufacturer from avoiding drug selection or an MFP merely by marketing a reformulated version of a product.
- Temporary small-biotech floor: For qualifying small-biotech drugs, a temporary floor applies in 2029 and 2030. It limits how far below that floor CMS may offer or agree to a price. CMS also finalized a modified treatment of non-FAMP in the adjusted ceiling calculation for certain qualifying drugs.
- Part D formulary inclusion: Part D plans must include a selected drug with an MFP in effect on their formularies, subject to applicable statutory and regulatory requirements.
- Payment limit: For selected drugs, the negotiated price used for payment may not exceed the MFP plus applicable dispensing fees.
- Renegotiation and generic competition: The rule sets out criteria for renegotiating selected drugs and for removing a drug when a generic or biosimilar is approved and marketed under the program’s “Bona Fide Marketing” rules.
The fixed-combination policy and small-biotech floor address different program considerations. The first supports consistent treatment across certain formulations; the second establishes a temporary limit for qualifying drugs. Neither provision identifies a drug’s future price or guarantees a particular outcome.
What Changes for a Beneficiary Taking Trulicity
Consider a Medicare beneficiary who takes Trulicity and remains enrolled in a plan that covers it. Trulicity is among the drugs selected for the third negotiation cycle, for which negotiated prices are scheduled to take effect January 1, 2028.
The new final rule does not announce Trulicity’s negotiated price. It also does not change the price at the pharmacy immediately. For this beneficiary, the relevant timing is the 2028 price applicability year, not the rule’s December 2026 effective date. The beneficiary’s actual cost will depend on the applicable program rules and plan details. The price for the 2029 cycle has not yet been determined.
A negotiated price and Medicare’s annual Part D out-of-pocket cap are separate provisions. The negotiated price is an MFP for a selected drug, subject to rules about how that price is applied. The Part D out-of-pocket cap limits covered Part D cost-sharing under the program. In 2026, that cap is $2,100; it is not a drug-specific price and should not be interpreted as the amount any individual will pay for a particular prescription. Plan documents, including the Summary of Benefits and Coverage, should be checked for applicable cost-sharing and coverage terms.
Negotiation Timeline
The rule extends a program that is already being implemented in annual cycles:
| Date | Program status |
|---|---|
| 2022 | The Inflation Reduction Act established the negotiation program. |
| January 1, 2026 | Negotiated prices for the first 10 selected drugs took effect. |
| January 1, 2027 | Negotiated prices for 15 drugs selected in the second cycle are scheduled to take effect. |
| January 1, 2028 | Negotiated prices for 15 drugs selected in the third cycle are scheduled to take effect. CMS selected Trulicity and Xolair, among other drugs, for this cycle. |
| December 5, 2026 | The final rule is scheduled to take effect. |
| 2029 | The fourth cycle’s negotiated prices are scheduled to begin under the codified framework. CMS may select up to 20 drugs for that year. |
CMS estimated that the first cycle would reduce Medicare spending by about $6 billion annually and beneficiary out-of-pocket spending by about $1.5 billion in 2026. Those were agency estimates for the first cycle, not a forecast of an individual’s savings or of prices in future cycles.
CMS has also said it intends to issue final guidance in fall 2026 on how MFPs will be effectuated for 2028. Policies for effectuating MFPs in 2029 and later are expected to be addressed through rulemaking in 2027.
What This Changes for You, and What It Does Not
What changes: The program’s selection, negotiation, and related administrative requirements will be codified for 2029 and later. CMS can continue selecting eligible drugs and may renegotiate certain previously selected drugs.
What does not change immediately: The rule’s issuance does not make a new 2029 price available at the pharmacy. The final rule takes effect December 5, 2026, while prices from future cycles apply in their designated price applicability years. Drug-specific prices and an individual’s plan cost-sharing should not be inferred from the rule alone.
What to check: CMS maintains a selected-drugs and negotiated-prices page. It lists selected drugs and available negotiated-price information. A drug’s active ingredient, dosage form, and covered product details may matter when comparing a prescription with a listed entry.
A plan review or counseling discussion can address questions such as:
- Is the exact drug and dosage form listed for a negotiated-price year?
- Is the drug covered under Part D or payable under Part B?
- What cost-sharing and coverage rules apply under the current plan?
- When does the relevant MFP take effect, and what information is available about how it is applied?
A licensed insurance agent or State Health Insurance Assistance Program (SHIP) counselor may help explain plan coverage and enrollment terms. The KFF explainer on pharmacy benefit managers provides additional background on the intermediaries that manage pharmacy benefits. Their role does not replace checking the Medicare plan’s own coverage documents.
Record Status
CMS issued the final rule on November 5, 2026. It is scheduled to take effect on December 5, 2026, and official Federal Register publication is scheduled for November 9. The codified framework applies to the 2029 initial price applicability year and beyond. The number of drugs CMS will select within the permitted limit, the drugs selected, and their negotiated prices for 2029 have not been confirmed. Current prices and plan coverage may differ and should be independently confirmed.