How Medicare decides which drugs it negotiates, and what it will pay

The Medicare Drug Price Negotiation Program is now running three cycles at once. Negotiated prices for the first ten products took effect in January 2026. A second set of 15 takes effect in January 2027. Talks on a third set of 15 close this autumn, and a fourth cycle is already in formal rulemaking.

For companies with products anywhere near the selection thresholds, the mechanics matter more than the politics. The Inflation Reduction Act of 2022 set out how the Centers for Medicare & Medicaid Services (CMS) picks the drugs, how it calculates the highest price it may agree, and what happens to a manufacturer that walks away.