backOn June 16, 2026, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule setting out the regulatory requirements of the price-control scheme established by Congress in the Inflation Reduction Act (“IRA”)—referred to as the Medicare Drug Price Negotiation Program (“MDPNP”)—which are currently set out in agency guidance.191 Fed. Reg. 36,236, 36,236 (June 16, 2026). Under the MDPNP, CMS imposes maximum fair prices (“MFPs”) on certain high expenditure, single source drugs and biological products through a “negotiation” process.2Ctrs. for Medicare & Medicaid Servs., Medicare Drug Price Negotiation Program: Initial Memorandum, Implementation of Sections 1191–1198 of the Social Security Act for Initial Price Applicability Year 2026, and Solicitation of Comments 1 (Mar. 15, 2023), https://www.cms.gov/files/document/medicare-drug-price-negotiation-program-initial-guidance.pdf.
The proposed rule articulates the processes and procedures CMS will follow from drug selection through establishment of MFP for selected drugs, as well as define when a drug may become ineligible or deselected from the MDPNP and when CMS may decide to “renegotiate” the price controls it has imposed. The proposed rule is intended to apply with respect to all initial price applicability years (“IPAYs”) beginning with IPAY 2029, including with respect to the selection of drugs and the negotiation or renegotiation of MFPs for IPAY 2029 that will take place during calendar year 2027.391 Fed. Reg. at 36,237.
For manufacturers, the proposed rule presents an opportunity in the evolution of CMS’s price-control scheme. During IPAYs 2026 – 2028, Congress directed CMS to operate the MDPNP through program instruction or other forms of (arguably nonbinding) program guidance.4Pub. L. 117–169, title I, §11001(c), Aug. 16, 2022. Instead of complying with that instruction, CMS imposed binding, substantive requirements on manufacturers and labeled them “guidance.” CMS now proposes to take the same requirements and codify them as final regulations published in the Federal Register.
Manufacturers could benefit from finalization of the proposed rule for several reasons. Any future changes would have to be implemented through another rulemaking process (unlike guidance, which CMS can change at will). The comment process permits stakeholders to engage with CMS on the MDPNP’s trajectory and to challenge CMS on the fundamental MDPNP implementation decisions. For example, manufacturers could build the record against aggregation, object to policies that override the statute’s waiting period from launch, seek to impose greater order on the MFP-setting process, and argue for a process that more accurately lives up to the statutory promise of “negotiation.” Depending on how CMS responds to comments, this rulemaking could provide manufacturers with a new opportunity to challenge the proposed rule, either as arbitrary and capricious or as violative of the statutory requirements. If nothing else, manufacturers could benefit from finalization of these regulations, as it could bring greater predictability to CMS’s operation of the price-control scheme.
Although the bulk of the proposed rule reiterates the positions previously set forth in guidance, CMS proposes at least one substantive change of which manufacturers should be aware. Under existing guidance, CMS treats a fixed combination drug as its own unique qualifying single source drug (“QSSD”). Under this approach, a product made by the same manufacturer that contains only one (but not all) of the active ingredients found in a fixed combination drug is not grouped together with that fixed combination drug for purposes of the price-control program.5See Ctrs. for Medicare & Medicaid Servs., Medicare Drug Price Negotiation Program: Final Guidance, Implementation of Sections 1191 – 1198 of the Social Security Act for Initial Price Applicability Year 2028 and Manufacturer Effectuation of the Maximum Fair Price in 2026, 2027, and 2028 167 (Sept. 30, 2025), https://www.cms.gov/files/document/ipay-2028-final-guidance.pdf. Instead, it is deemed a separate, independent QSSD.6Id. Under the proposed rule, CMS proposes a “narrow modification” to that policy “if CMS determines that products with the same New Drug Application (‘NDA’)/Biologics License Application (‘BLA’) holder differ in active moiety(ies)/active ingredient(s) due to the inclusion of an active moiety/active ingredient that creates a new formulation and enables an alternative route of administration for the co-administered active moiety(ies)/active ingredient(s), then CMS will identify the potential [QSSD] using all dosage forms and strengths of the shared active moiety(ies)/active ingredient(s) that is offered by the same NDA/BLA holder.”791 Fed. Reg. at 36,236.
Perhaps seeking to soften the blow of this new policy, CMS states that the proposed fixed combination approach would “expand the number of products aggregated under a selected drug that would become deselected once a generic or biosimilar is subject to Bona Fide Marketing for any dosage form or strength of the selected drug.”8Id. at 36,333. As a result, CMS argues a fixed dose combination drug that is included in the QSSD determination under the proposed policy would “potentially hav[e] the agreed-upon MFP applied for a shorter period of time than if it had been identified as a separate [QSSD] that was selected and negotiated separately.”9Id.
This new proposed policy, if adopted, could also result in a scenario where one of the drugs grouped together as a QSSD “has a generic or biosimilar that is subject to Bona Fide Marketing before that drug’s eligibility for selection.” That could result in all drugs included in the QSSD “being ineligible for selection for negotiation,” meaning that an MFP could not be negotiated.10Id.
Comments on the proposed rule are due to CMS no later than 5 PM on August 17, 2026. Please let us know if you have any questions regarding the proposed rule or are interested in submitting a comment. King & Spalding would be happy to assist.