3 insights from the third set of drugs for Medicare price negotiations

This morning, CMS released the names of the third set of drugs to be negotiated under the Inflation Reduction Act (IRA). The new maximum fair price (MFP) for these 15 products will be announced in November 2026, with implementation in January 2026.

This cycle of drugs includes those that are payable under Medicare Part B and/or covered under Medicare Part D and accounted for $27 billion in expenditures. CMS said approximately 1.8 million people with Medicare Part B and/or Part D coverage used these drugs between November 2024 and October 2025. The drugs are selected to treat a variety of conditions, such as cancer, psoriatic arthritis, and HIV type 1 infection.

“It’s important to remember that the IRA requires CMS to select the eligible drugs with the highest spending, so these lists are a reflection of where Medicare is spending the most, not a reflection of some strategic choices CMS is making about which drugs to negotiate,” Benjamin N. Rome, M.D., M.P.H., told Managed Healthcare Executive. Rome is a faculty member in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital in Boston.

Topping the list is Trulicity, which is used to treat Type 2 diabetes. More than 600,000 people with Medicare used Trulicity, costing the Medicare program $4.89 billion between November 2024 and October 2025. The next highest spending drug is Biktarvy, which is used to treat people with HIV. CMS spent $3.90 billion during the same time frame. (Full list below)

This is the first time that a drug has been chosen for a price renegotiation: Tradjenta, which is used to treat patients with Type 2 diabetes. Several factors make a product eligible for renegotiation, Milena Sullivan, partner at Blue Matter Consulting, said in an interview.

“If a product has an MFP set but hits the next threshold of years on the market, it automatically becomes subject to renegotiation,” she said. “Other factors include meaningful changes in the market or in the price of the product that could impact access. This is the first time we see a product getting renegotiated. But it’s probably not going to be as significant, given that generic competition is looming on the horizon very soon.”

Learning 1: Savings limited for many drugs on the list

Similar to the 2026 and 2027 Medicare Price Negotiation Drugs, the 2028 list contains several drugs that either will have generic competition in the near future or are rebated, Jeffrey Casberg, M.S., vice president of clinical pharmacy at IPD Analytics and a Manage Healthcare Executive board member, pointed out.

In fact, 8 of the 15 (53%) will have multisource competition on 1/1/2028 or within a year after, which will limit the savings impact to payers and patients, and 10 of the 15 (66%) are heavily rebated products, which limits the savings to payers.

Casberg said the largest financial impact to lower drug costs will likely be the oncology drugs and Botox, as these products historically are not heavily rebated/discounted.

But Sullivans points out that the reviously negotiated MFPs will be setting a new pricing benchmark for newly selected drugs. “This is particularly important for therapeutic areas like oncology, mental health and HIV, which have traditionally been protected classes and Medicare negotiations is causing more significant price erosion relative to today and could impact patient access in these sensitive conditions over time,” she said..

Learning 2: Therapeutic expansion beyond chronic conditions

The negotiation program is evolving from its initial focus on high-prevalence chronic conditions and small molecule products for complex populations. The recent selection shows increasing inclusion of specialty products, particularly in oncology and immunology. This year marks the first significant impact on immunology, with four immunology products on the list that have both Part B and Part D spending: Cimzia, Cosentyx, Orencia and Xeljanz/XR. These products are offered both as intravenous and as a subcutaneous injection. These drugs are administered in physician offices and also dispensed through pharmacies.

Botox, which is used to treat chronic migraine, overactive bladder and spasticity, is also a Part B drug. This is the first year in which Part B drugs, which cover outpatient care and doctors’ services, are included.

Sullivan pointed out that the introduction of multiple products with utilization in both Part B and Part D is introducing a new set of methodological and operational challenges, because CMS will be negotiating price at the molecule level and not necessarily sufficiently considering the unique dynamics under the pharmacy and medical benefit

Lesson 3: Policy changes reshape negotiation eligibility

Significant policy developments dramatically altered which drugs qualify for Medicare price negotiations. First, the passage of the Big Beautiful Big Act (OBBA) in July 2025 expanded the orphan drug exclusion. Originally, only drugs with a single orphan disease indication were exempt from negotiation.

Now drugs treating only orphan conditions are completely exempt from price negotiations. Additionally, drugs with both orphan and common indications now have their negotiation timelines delayed, with the clock starting only when they receive approval for treating common conditions.

This policy change has led to several PD-1 inhibitors that treat cancer not being included on this list for negotiations. For example, Keytruda (with $29 billion in 2024 sales) and Opdivo ($5.3 billion in 2024 sales) are products that could have been impactful products included in this list but are now delayed because of the new law.

As CMS has provided greater policy clarity over time, predictions about which drugs will be selected have become increasingly accurate, Sullivan said. “Early uncertainties around Medicare Advantage spending calculations, orphan drug handling, and other policy details have been resolved, making the selection process more transparent and predictable.

However, the process remains dynamic due to factors like biosimilar launch timing, the upcoming sunset of the small biopharma exemption, and evolving therapeutic area impacts,” she said.

She also said that CMS has clarified that total Medicare spending calculations for ranking drugs would include both fee-for-service and Medicare Advantage utilization for Part B drugs.

“This wasn’t necessarily a policy change but rather a clarification that resolved previous uncertainty about which datasets CMS would use,” Sullivan said. “The inclusion of Medicare Advantage data significantly impacted the rankings, causing several Part B products to climb higher on the negotiation list as their total spending calculations increased. This leapfrogged some Part B drugs ahead of Part D products that would have otherwise been selected earlier.”

The select drugs for negotiation

• Anoro Ellipta, COPD
• Biktarvy, HIV
• Botox, chronic migraine, overactive bladder, spasticity
• Cimzia, Crohn’s disease
• Cosentyx, plaque psoriasis, psoriatic arthritis
• Entyvio, Crohn’s disease, ulcerative colitis
• Erleada, prostate cancer
• Kisqali, breast cancer
• Lenvima, thyroid, endometrial, liver and kidney cancers
• Orencia, psoriatic arthritis, rheumatoid arthritis
• Rexulti, major depressive disorder, schizophrenia, agitation from Alzheimer’s
• Trulicity, Type 2 diabetes
• Verzenio, breast cancer
• Xeljanz; Xeljanz XR, psoriatic arthritis, rheumatoid arthritis, ulcerative colitis
• Xolair, asthma, chronic spontaneous urticaria