Mintz IRA Update — IRA Medicare Drug Price Negotiation Program Updates for Q3 2025

This article is part of the Mintz IRA Update – Fifth Edition. Explore the full series of IRA-related insights here.

On May 12, 2025, the Centers for Medicare & Medicaid Services (CMS) issued draft guidance for the third cycle of the IRA’s Medicare Drug Price Negotiation Program (Negotiation Program). This draft guidance (Draft Guidance) addresses the Negotiation Program’s expansion into Medicare Part B and introduces a framework for renegotiating previously negotiated drug prices. However, recent legislative activity may affect the timing of this third cycle of negotiations. The inclusion of Part B drugs in the Negotiation Program allows CMS to target high-cost medications not previously captured under the Negotiation Program. Renegotiations allow CMS and manufacturers a second chance to take into consideration changes in the pharmaceutical market.

Timeline for Third Cycle of the Negotiation Program

Under the IRA, CMS is authorized to negotiate “maximum fair prices” (MFPs) for select high-cost, single-source drugs that lack generic or biosimilar competition. The first cycle of negotiations concluded in 2024 and covered 10 Part D medications, with negotiated MFPs for those drugs slated to go into effect on January 1, 2026. A second cycle of negotiations targeting 15 additional Part D drugs is underway, with the final negotiated MFPs scheduled to go into effect on January 1, 2027. CMS’s publication of the Draft Guidance kicks off the third cycle of negotiations, issuing proposed collection requests focused on gathering information necessary to identify (1) which drugs qualify for the small biotech exception, (2) which biological products qualify for an initial delay in consideration for selection for the Negotiation Program in 2028, and (3) which drugs will be selected for the third cycle of negotiation and renegotiation of MFPs from prior cycles. In addition, the Draft Guidance seeks comment from stakeholders on how to increase transparency in the Negotiation Program. The comment period closed on June 26, 2025. Key dates in the timeline for the third cycle of the Negotiation Program are as follows:

• May 12, 2025: Draft Guidance issued. Public comment period began.
• June 26, 2025: Public comment period closed.
• Summer – Fall 2025: Additional data collection requests, and issuance of final guidance.
• February 1, 2026: CMS will publish (1) a list of up to 15 Part B and/or Part D drugs selected for the third of cycle MFP negotiations, (2) a list of up to 50 Part B and/or Part D drugs that were eligible for negotiation in the third cycle (which will include the list of selected drugs for 2028), and (3) a list of any previously selected drugs from the first or second cycles of negotiations that are slated for renegotiation in the third cycle.
• March 1, 2026: Deadline for (1) manufacturers of drugs selected for participation in the 2028 Negotiation Program to submit data for consideration in the negotiation or renegotiation of MFPs, and (2) public stakeholder input.
• June 1, 2026: Deadline for CMS to issue initial MFP offers to manufacturers of selected drugs.
• November 1, 2026: Negotiation period ends.
• November 30, 2026: CMS to publish finalized negotiated and renegotiated MFPs for the third cycle selected drugs.
• January 1, 2028: New and renegotiated MFPs take effect.

Key Developments in the Draft Guidance

1. Broadening Scope to Include Part B Drugs. Beginning in 2028, certain drugs payable under Medicare Part B (typically medications administered in a hospital or a physician’s office) will be subject to MFP negotiations. The Draft Guidance invited input on approaches to calculating the MFP for those selected drugs that are not paid based on average sales price or wholesale acquisition methods.
2. Introducing Renegotiation. As directed by the IRA, CMS outlines criteria for the renegotiation of MFPs for drugs selected during the first cycle and second cycle of negotiations, all of which currently have MFP effective dates in 2026 or 2027. Renegotiation-eligible drugs that have had a change in monopoly status to become either a long-monopoly drug (a drug that has been FDA-approved for at least 16 years) or extended-monopoly drug (a drug that has been FDA-approved for at least 12 years and less than 16 years) will automatically be selected for renegotiation. CMS will then review the remaining selected drugs from the first two cycles of negotiation and identify those for which a new indication has been added. This includes both new indications that have received FDA approval, as well as new indications that are not FDA-approved but have been added in nationally recognized, evidence-based guidelines and listed in CMS-recognized Part D compendia. Finally, CMS will review the remaining selected drugs from the first two cycles of negotiation for a material change in any Social Security Act Section 1194(e) factor and consider the likelihood that, after renegotiation, the renegotiated MFP would represent a 15% or greater change relative to the current MFP. If the renegotiated MFP would meet that 15% threshold, the drug will be eligible for renegotiation. The Draft Guidance invited comment on whether applying the standard MFP negotiation process to renegotiation would be practicable.
3. Enhancing Transparency and Efficiency. The Draft Guidance seeks to promote greater transparency in the process for identifying selected drugs by publishing a list of up to 50 of the top negotiation‑eligible Part B and/or Part D drugs (including the list of up to 15 drugs already selected for MFP in 2028). The list will be ranked by combined total expenditures under Part B and Part D. The list will not include those negotiation‑eligible drugs that qualify for the Biosimilar Delay. The Draft Guidance solicited comments on ways to increase transparency in the process for selecting MFP drugs for renegotiation.
4. Public Engagement. In the Draft Guidance, CMS states it plans to host up to 15 patient-focused roundtable events and town hall meetings in Spring 2026 to gather input on drugs selected for negotiation or renegotiation. The roundtables will be open to patients, patient advocacy organizations, and caregivers. CMS further encourages practicing clinicians and researchers, as well as other interested parties, to register to participate.
5. Medicare Transaction Facilitator. The Draft Guidance proposes parameters and requirements for data exchange between participating manufacturers and dispensing entities (via a Medicare Transaction Facilitator) to facilitate access to MFPs of selected drugs for entities that dispense a selected Part D drug to a verified MFP-eligible beneficiary.
6. Enforcing Manufacturer Obligations. The Draft Guidance outlines the requirements for manufacturers to comply with the Negotiation Program and proposes civil monetary penalties for, among other things, a manufacturer’s (1) failure to ensure access to a price less than or equal to the MFP for MFP-eligible beneficiaries and pharmacies and other dispensing entities; (2) failure to pay the rebate amount for a biological product for which inclusion on the selected drug list was delayed but which has since undergone negotiation; (3) provision of false information related to the Small Biotech Exemption and the Biosimilar Delay; or (4) failure to pay a Biosimilar Delay rebate.

“One Big Beautiful” Exemption

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA) that combines tax, spending, and health care measures and forms the core of the president’s agenda for his second term. The OBBBA contains a provision that, while brief, has significant implications for the Negotiation Program. Section 71203(a) of the OBBBA expands and clarifies the exclusion for orphan drugs under the Negotiation Program by amending the exemption at 42 U.S.C. 1320f‑1(e)(3)(A) to include drugs that are designated for one or more rare diseases or conditions, and clarify that the negotiation period for drugs or biological products that have lost their orphan drug exclusion status will begin the day after such drug is approved as a non-orphan drug or such biological product is licensed as a non-biological product. As a result of this provision, drugs that are approved for several orphan diseases but not for more common conditions are now exempted entirely from the Negotiation Program, and Medicare price negotiations for products that were first approved as orphan disease drugs but later were approved for wider use, including several blockbuster drugs, could now face postponed negotiation timelines. This section of the OBBBA could potentially delay anticipated savings for seniors and taxpayers and, according to a Congressional Budget Office’s report, cost Medicare nearly $5 billion in lost MFP-related savings over the next decade.

The Draft Guidance sets forth CMS’s preferred approach to the future of the Negotiation Program, but prior to issuing the final guidance for the third cycle in Fall 2025, CMS will need to account for any legislative changes enacted, including those in the OBBBA, while preserving the Negotiation Program’s goals of containing costs, streamlining negotiations, and increasing transparency in the process.

Subscribe To Viewpoints