How CMS’ Final Negotiation Rule Treats New Drug Formulations

The Centers for Medicare & Medicaid Services (CMS) has finalized a rule that writes most of the Medicare Drug Price Negotiation Program’s guidance-based policies into federal regulation, the agency announced.¹ The Inflation Reduction Act’s (IRA) requirement that CMS run the program through guidance ends after 2028. The rule governs drug selection and negotiation in 2027 for prices effective in 2029.²

The rule does more than codify existing practice. Under a new fixed dose combination (FDC) drug policy, CMS will treat certain new formulations as part of the original product when they come from the same new drug application (NDA) or biologics license application (BLA) holder and an added ingredient enables a new route of administration, such as hyaluronidase for subcutaneous use of an intravenous drug.² In CMS’ example, if a biologic is selected for 2029 and a price is agreed, that price would cover its hyaluronidase version starting that year. If treated as a separate drug, the newer version might not have been selected until 2039.²

CMS proposed the rule in June. The final version is scheduled for publication in the Federal Register on Nov. 9 and takes effect Dec. 5, 2026. Program guidance continues to govern 2026 through 2028. The codified provisions apply starting in 2029, including to drugs selected in earlier cycles. According to CMS, the agency received approximately 11,330 timely comment letters on the proposed rule.²

"President Trump directed us to lower drug costs for Americans using every tool at our disposal," said CMS administrator Dr. Mehmet Oz in a press release.¹ Oz said the rule gives CMS more tools to negotiate better deals and to deliver savings for taxpayers and beneficiaries.

What Comes Next for the Fourth Negotiation Cycle?

By Feb. 1, 2027, CMS will select up to 20 more drugs covered under Part D, payable under Part B or both. It will also select drugs for renegotiation as appropriate.¹ Past cycles selected 10 drugs for 2026, 15 for 2027 and 15 for 2028, with a single drug selected for renegotiation that year.²

CMS waived the standard 60-day delayed effective date for major rules. That leaves it enough time to review biosimilar manufacturers' initial delay requests before the Feb. 1 statutory deadline for the selected drug list.

How Does the Rule Treat Fixed Combination Drugs?

The policy targets one reformulation strategy, which is adding an ingredient to an existing drug so it can be given a different way. CMS’ example is adding hyaluronidase so an intravenous biologic can be injected under the skin. When the same NDA or BLA holder markets both versions, CMS will treat them as one drug in deciding what is eligible for negotiation. That grouping covers every dosage form and strength of the shared active ingredient.²

CMS said the policy as a program integrity measure. In the agency's view, it removes an incentive for a primary manufacturer to move patients to a new formulation to avoid the maximum fair price (MFP).¹

Commenters pushed back during the comment period. Many said the policy discounts what it takes to bring subcutaneous formulations to market: separate clinical programs, pharmacokinetic studies, manufacturing work and FDA review.² They also argued that newer products would inherit an older product's negotiation timeline. A few said CMS had offered no evidence that companies develop such formulations to avoid negotiation, noting that hyaluronidase-based subcutaneous products predate the IRA. Others said the policy would fall hardest on small biotechs and delivery-technology platform companies.2

CMS responded that the policy is limited to that narrow category of fixed combination drugs. It said commenters did not name specific products that would qualify but shouldn't. The agency also pointed to the Temporary Floor for Small Biotech Drugs as added protection for qualifying smaller manufacturers. It said it will monitor implementation and consider changes after gaining experience with the policy.

How Will the Temporary Floor for Small Biotech Drugs Work?

The floor is required by law and applies to initial price applicability years 2029 and 2030.¹ It bars CMS from offering or accepting an MFP counteroffer below a specified level for eligible Small Biotech Drugs. The rule sets that floor at 66% of the drug's 2021 average non-federal average manufacturer price, adjusted for inflation. If no 2021 figure exists, CMS uses the first full year after market entry.²

How Do the Part D Provisions Affect Plans and Dispensing Entities?

The rule also codifies two existing Part D requirements. Plans must carry selected drugs with an MFP in effect on their formularies. The negotiated price they pay dispensing entities for those drugs cannot exceed the MFP plus any dispensing fees.² Some commenters pushed for pharmacy protections, including a minimum dispensing fee and a ban on direct and indirect remuneration data fees for selected drugs. CMS declined to set dispensing fee requirements but said it will keep closely monitoring reimbursement for selected drugs, including pharmacy price concessions and dispensing fees.

What Are the Commercial and Market Access Implications?

The fixed combination policy changes product lifecycle math. "In essence, a reformulation into an FDC was an opportunity for manufacturers to manage their drug lifecycle," Alan Crowther, general manager of global pricing and access at EVERSANA, explained in a June statement to Pharmaceutical Commerce on the proposed rule.³

A qualifying reformulation that adds an ingredient enabling a new route of administration no longer starts its own negotiation clock. In CMS' hyaluronidase example, an MFP would reach the new formulation in 2029 rather than potentially 2039. Commenters said that shortens the window to recover development costs for subcutaneous products.

"While many drugs would not have such an option, for cardiovascular, renal, metabolic, and obesity therapy area products in particular, such combinations are common and would potentially no longer be able to use this strategy to avoid impact," Crowther said.

Formulary coverage isn’t the end of the story for selected drugs. Commenters warned that once those drugs drop to their negotiated prices, plans and PBMs may steer patients toward non-selected rivals that still carry higher rebates and fees.² CMS said its formulary reviews check for exactly that.

References

1. Centers for Medicare & Medicaid Services. "CMS Final Rule Strengthens Supports Lasting Drug Savings." News release. Nov. 5, 2026. Accessed Nov. 6, 2026. https://www.cms.gov/newsroom/press-releases/cms-final-rule-strengthens-supports-lasting-drug-savings

2. Centers for Medicare & Medicaid Services. Medicare Drug Price Negotiation Program and Medicare Prescription Drug Benefit Program (CMS-4215-F). Federal Register public inspection document No. 2026-22792. Scheduled for publication Nov. 9, 2026. Accessed Nov. 6, 2026. https://www.federalregister.gov/public-inspection/2026-22792/medicare-drug-price-negotiation-program-and-medicare-prescription-drug-benefit-program

3. Crowther, Alan. EVERSANA. Statement to Pharmaceutical Commerce. June 2026.