The Centers for Medicare and Medicaid Services (CMS) recently announced the second cohort of Medicare Part D drugs selected for Maximum Fair Price negotiation (MFP) as part of the enhanced drug pricing authority granted to CMS by Congress through the Inflation Reduction Act (IRA). The MFPs for the 15 selected drugs will be determined over the next several months pursuant to the regulatory process established by CMS. MFPs for the current cohort will take effect on January 1, 2027, the initial price applicability year (IPAY) for these medicines. According to CMS, products were selected based on total gross covered prescription drug costs under Medicare Part D among other criteria set forth in the IRA.1
The new cohort reflects an increase in selected oncology and pulmonology drugs compared to the IPAY 2026 cohort, which was comprised of 10 drugs. The IPAY 2027 cohort also reflects a decrease in the selection of rheumatology, hematology, and nephrology products. Newly included therapeutic areas for 2027 are treatments for hepatology, psychiatry, neurology, and rare diseases.
The 2027 cohort also contains certain innovator versions of the increasingly popular glucagon-like peptide-1 receptor agonists (commonly referred to as “GLP-1 drugs”).2 As a group, the selected drugs are indicated for multiple conditions including Type 2 diabetes, cardiovascular disease, and obesity although the selected products do not share identical product indications. Medicare does not currently cover GLP-1 drugs when prescribed solely for weight loss,3 and therefore obesity-only prescriptions are presumably excluded from the total Part D gross covered prescription drug expenditures that serve as the basis for GLP-1 drugs product selection in the IPAY 2027 cohort.4
MFP By the Numbers: The IPAY 2026 and IPAY 2027 cohorts include 25 total products produced by 16 manufacturers. Nine unique manufacturers of ten (10) products were selected for IPAY 2026. Of those nine manufacturers, six were also selected for IPAY 2027. In total, both cohorts focus on 12 conditions, five of which are included in both years.
Negotiating with CMS for MFPs
Over the coming months, manufacturers of the affected products may engage in negotiations with CMS, with the final MFPs scheduled for publication by November 30, 2025. Manufacturers who choose to participate will submit economic and market data for their selected drugs. CMS will review that data and host listening sessions with clinicians and consumer groups before making an initial offer by June 1, 2025. The manufacturer may then either accept the initial offer or make a counteroffer.
As outlined in “Medicare Drug Price Negotiation Program: Final Guidance, Implementation of Sections 1191 – 1198 of the Social Security Act for Initial Price Applicability Year 2027 and Manufacturer Effectuation of the Maximum Fair Price in 2026 and 2027,” (or “October Drug Price Negotiation Guidance”) published in October 2024, CMS has adjusted the timing of the three optional negotiation meetings between CMS and participating manufacturers.6 Now manufacturers can meet with CMS prior to submitting a counteroffer to the initial price offer instead of only after submitting a counteroffer.
Below is a summary of key dates for manufacturers to bear in mind as they collect data, analyze market factors and costs relevant to planned negotiations, and refine their strategic economic analyses in preparation for negotiations with CMS:
IPAY 2027 Key Dates7
Uncertainty Emanates from a New Administration
On January 20, 2025, President Trump revoked Executive Order 14087, titled “Lowering Prescription Drug Costs for Americans,” which directed CMS’s Center for Medicare and Medicaid Innovation (CIMMI) to develop three new drug payment models to be implemented alongside the drug pricing provisions of the IRA. Although these models were in relatively early stages of development, CMMI has the legal authority to carry out pilot and experimental projects and could potentially still test these models. President Trump also ordered the halt of the disbursement of funds related to the IRA. The scope of Executive Order 14087 was later clarified to be limited to energy initiatives.9
As of the date of this publication, we have not identified any legislative or further executive action directly impacting the drug price negotiation provisions of the IRA, and there remains bipartisan support for measures aimed at reducing the cost of healthcare in the United States. The new administration has not clarified its strategy for addressing drug pricing, leaving stakeholders uncertain about potential future changes. In the interim, drug price negotiations for IPAY 2027 are anticipated to continue as planned. As these discussions progress, industry observers and policymakers alike are keen to observe the evolving political landscape and assess the potential implications for future drug pricing policies and healthcare cost management.
IPAY 2027 and IPAY 2026 Selected Drugs
Below is the full list of drugs that have been selected for negotiation in IPAY 2026 and IPAY 2027.
Sources
[1] See https://www.cms.gov/newsroom/press-releases/hhs-announces-15-additional-drugs-selected-medicare-drug-price-negotiations-continued-effort-lower
[2] Notably, the MFP selection process was established to avail Medicare of direct price negotiation with manufacturers of single-source, high expenditure drugs for which no generic or biosimilar alternative is available. MFP selection of certain GLP-1 products applies to the named innovator products only as self-administered compounded GLP-1 drugs are not covered by Medicare. This means that the existence of widely available versions of GLP-1 drugs compounded under Section 503 A of the Food Drug & Cosmetic Act present an alternative product source for patients but do not render the innovator manufacturer exempt from MFP negotiation for those drugs; meanwhile, compounded alternatives to innovator GLP-1 products are exempt from both the FDA’s new and abbreviated drug approval processes and CMS’s MFP negotiation.
[3] For further information regarding coverage, see https://www.cms.gov/newsroom/fact-sheets/contract-year-2026-policy-and-technical-changes-medicare-advantage-program-medicare-prescription
[4] See https://www.cms.gov/newsroom/press-releases/hhs-announces-15-additional-drugs-selected-medicare-drug-price-negotiations-continued-effort-lower
[5] Some selected drugs treat multiple conditions.
[6] See https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf
[7] See https://www.cms.gov/files/document/fact-sheet-medicare-drug-price-negotiation-program-ipay-2027-final-guidance-and-mfp-effectuation.pdf
[8] CMS will respond to statutory written counteroffers from participating drug companies within 30 days after receipt of a counteroffer or within 60 days of sharing the initial offer, whichever is later. CMS and participating drug companies may engage in up to two optional negotiation meetings during the negotiation period as well as additional written price exchanges.
[9] See https://www.whitehouse.gov/briefings-statements/2025/01/omb-memo-m-25-11/
