Contributed by SME, Steven Miller, 340B Health

The Inflation Reduction Act (IRA) continues to reshape the Medicare prescription drug landscape through the implementation of the Medicare Drug Price Negotiation Program. On January 1, 2026, negotiated Maximum Fair Prices (MFPs) took effect for the first 10 Medicare Part D drugs selected by the Centers for Medicare & Medicaid Services (CMS). CMS has since announced negotiated prices for an additional 15 Part D drugs, effective January 1, 2027. The agency has also identified another 15 drugs that will be subject to negotiated pricing beginning January 1, 2028, including products covered under Medicare Parts B and D, although the negotiated price ceilings for those drugs have not yet been released.

As the program’s implementation progresses, manufacturers have begun responding in different ways. Several manufacturers lowered the wholesale acquisition cost (WAC), or list price, of products selected for negotiation during late 2025 and early 2026. In some cases, these pricing actions significantly narrowed the gap between a drug’s list price and its negotiated Medicare price. At the same time, market changes have altered the makeup of the negotiated drug list. Four of the original 10 MFP drugs have lost exclusivity, resulting in CMS removing those brand-name products from the negotiated pricing program, effective December 31, 2026. As a result, only 6 of the original 10 drugs are expected to remain subject to Medicare-negotiated pricing at the start of 2027.

Among the remaining products, the degree of government savings varies considerably. For certain drugs, manufacturer pricing actions reduced or nearly eliminated the difference between the negotiated MFP and the product’s list price. In at least one notable case, a manufacturer lowered its WAC to approximately match the negotiated MFP, which is less than the drug’s estimated net price for fourth-quarter 2025. Additionally, some negotiated drugs now face generic competition, with generic alternatives available at prices below both the original list price and the negotiated MFP. These market dynamics illustrate how competition and manufacturer pricing strategies can influence the real-world impact of Medicare price negotiations.

Another emerging trend is the effect of negotiated pricing on manufacturer net revenues. Analysis of estimated net pricing for several 2026 MFP drugs suggests that some manufacturers may have experienced increased net revenue from the fourth quarter of 2025 through the first quarter of 2026. While negotiated prices reduced Medicare reimbursement rates, corresponding changes in rebates, discounts, contracting strategies, and list prices may have helped offset portions of the anticipated financial impact. These developments underscore the complexity of evaluating the overall effectiveness of the negotiation program based solely on published MFP reductions.

Healthcare providers, pharmacies, and health systems should carefully monitor these developments as the number of negotiated drugs continues to expand each year. Beginning in 2026, Medicare Part D plans are required to reimburse dispensing pharmacies based on the negotiated MFP, plus any applicable dispensing fee. Similarly, Medicare Part B reimbursement for negotiated drugs will be tied to the negotiated price, along with any applicable administration payment as required under federal law. As additional drugs are selected for annual negotiation, the financial implications for providers and pharmacies are expected to grow.

The scope of the program is also broadening. Beginning in 2028, CMS may select drugs covered under Medicare Parts B and D, or both. This change will bring a growing number of physician-administered specialty medications into the negotiation framework. Many of these products represent high-cost therapies that account for a substantial portion of healthcare spending. Although some negotiated drugs will likely leave the program each year due to generic competition or loss of exclusivity, the addition of new specialty therapies may result in a larger overall financial impact on providers, pharmacies, and manufacturers.

To prepare for these changes, healthcare organizations should proactively assess their exposure to negotiated pricing. Reviewing prescribing patterns, dispensing volumes, and payer mix data can help organizations estimate the financial impact of reduced reimbursement for MFP drugs. Organizations should also evaluate utilization trends across service lines and identify areas where negotiated products represent a significant share of drug expenditures or revenue.

In addition, pharmacy and therapeutics committees may wish to review formulary positioning of negotiated drugs when clinically appropriate. Evaluations should consider whether alternative therapies offer comparable efficacy, safety, and patient outcomes while aligning with established clinical guidelines and organizational treatment protocols. Any formulary decisions should remain grounded in evidence-based medicine, ongoing post-marketing surveillance, and patient-specific clinical considerations.

As the Medicare Drug Price Negotiation Program continues to evolve, healthcare organizations will need to balance patient access, clinical outcomes, and financial sustainability. Understanding the interactions among negotiated pricing, manufacturers’ market strategies, reimbursement changes, and formulary management will be critical for organizations navigating the expanding scope of the IRA’s drug pricing provisions. Organizations that build MFP exposure into their annual budgeting and formulary review cycles will be better positioned than those that treat each year’s negotiated drug list as a one-time compliance update.