CMS finalizes guidance for third cycle of Medicare negotiations

The US Centers for Medicare & Medicaid Services (CMS) has finalized guidance for the third cycle of the Medicare Drug Price Negotiation Program, which will set maximum fair prices in 2028 and outline how manufacturers must implement these across 2026–2028.

The move comes as Medicare drug negotiations, first authorized in 2022, continue to reshape the pharmaceutical landscape. The program’s first cycle, covering 10 high-cost Part D drugs, is expected to cut net spending by around $6 billion when prices take effect in 2026. A second cycle involving 15 more therapies is underway, with the third round set to begin in 2026.

The final guidance broadens the orphan drug exclusion, ensuring that drugs approved solely for rare diseases are protected from negotiation. It also modifies how CMS calculates total expenditures for Part B medicines, combining Medicare Advantage encounter data with fee-for-service claims to capture real-world usage more accurately. Vaccines for infectious diseases remain eligible, though CMS has clarified how qualifying products will be identified.