CMS publishes final Medicare drug negotiation rule

The Centers for Medicare & Medicaid Services published a final rule in the Federal Register on Monday, Nov. 9, 2026, titled "Medicare Drug Price Negotiation Program and Medicare Prescription Drug Benefit Program." The rule updates policies for the Medicare Drug Price Negotiation Program and the Medicare prescription drug benefit.

CMS removed all references to the Coverage Gap Discount Program from the discussion of Primary Manufacturer termination. The Inflation Reduction Act sunset the program effective Dec. 31, 2024, and manufacturer agreements automatically terminated that day, the rule states. Requirements for that program remain codified in subpart W of 42 CFR part 423.

For Part D prescription drug event records, the agency will use only records with a compound code field equal to "1=Not a Compound" when calculating total expenditures used for the low-spend Medicare drug exclusion, identifying negotiation-eligible drugs and selected drugs, setting the maximum fair price ceiling, and applying the price across dosage forms and strengths. Records with "2=Compound" are excluded. For Part B, claims billed with HCPCS code J7999 as compounded drugs will be excluded from the same calculations.

Maximum fair price layout files will show NDC-9 maximum fair price per-unit prices rounded to six decimal places. CMS said rounding to six decimal places matches how the agency publishes other prices, and reversing the calculation still yields the agreed-upon price per 30-day equivalent.

For the orphan drug exclusion, CMS will treat Aug. 12, 2013, as the withdrawal date for orphan drug designations withdrawn on or before that date. For designations withdrawn after Aug. 12, 2013, the agency will use the withdrawal date recorded in the FDA Orphan Drug Product designation database.

CMS will consider March 23, 2020, as the licensure date for biological products with approved new drug applications that were deemed to be biologic license applications under the BPCI Act. The agency said it will use that date when identifying time since licensure under the negotiation statute.

On formularies, the final rule addresses negative changes that remove a selected drug from a Part D formulary. It does not prevent Part D plan sponsors from making other negative changes, such as moving a selected drug to a higher cost-sharing tier or adding utilization management, as long as applicable requirements are met.

Separately, the rule notes that average sales price reported by a manufacturer must include the maximum fair price, and average sales price is typically the basis for the Part B inflation rebate. By contrast, average manufacturer price, which is the basis for the Part D inflation rebate, excludes the maximum fair price.