CMS Drug Price Negotiation 2028: What Medicare Beneficiaries Need to Know
New CMS guidance for 2028 drug price negotiations could significantly lower prescription costs for Medicare beneficiaries. Here's what this means for your coverage and out-of-pocket expenses.
Source: This information is based on the official CMS press release from September 30, 2025, regarding final guidance for the Medicare Drug Price Negotiation Program's third cycle.
The Centers for Medicare & Medicaid Services (CMS) released final guidance for the third cycle of negotiations under the Medicare Drug Price Negotiation Program. This guidance, which takes effect for price applicability year 2028, includes policy refinements that may benefit Medicare beneficiaries through potential prescription drug cost reductions.
What Is the Medicare Drug Price Negotiation Program?
The Medicare Drug Price Negotiation Program is a federal initiative that allows CMS to negotiate directly with pharmaceutical manufacturers to establish "Maximum Fair Prices" (MFPs) for high-cost prescription drugs. This program was established to help lower prescription drug costs for Medicare beneficiaries and reduce overall healthcare spending.
How the Program Works:
- • Drug Selection: CMS selects high-cost drugs based on total Medicare spending
- • Price Negotiation: Manufacturers negotiate with CMS to establish Maximum Fair Prices
- • Implementation: Negotiated prices take effect for all Medicare beneficiaries
- • Focus: Program targets drugs with the highest Medicare expenditures
Key Changes in the 2028 Guidance
The new guidance includes several important updates that could expand the program's impact and provide additional protections for certain drug categories. Here are the key changes Medicare beneficiaries should understand:
Enhanced Orphan Drug Protections
The guidance implements expanded protections for orphan drugs (drugs for rare diseases) under federal legislation. Drugs designated by the FDA for rare diseases will have broader exclusions from price negotiation, preserving incentives for rare disease research while maintaining negotiation eligibility when appropriate.
What This Means for Beneficiaries:
- • Rare Disease Protection: Rare disease treatments may be protected from price negotiations
- • Innovation Incentives: Continued development of specialized medications may be encouraged
- • Access Preservation: Beneficiaries with rare conditions may maintain access to innovative treatments
Medicare Advantage Integration
A key change in the guidance is the inclusion of Medicare Advantage (MA) encounter data alongside traditional Fee-for-Service (FFS) claims data when calculating total expenditures for drug selection. This ensures more equitable treatment across all Medicare coverage types.
Impact on Medicare Advantage Enrollees:
- • Accurate Cost Representation: More accurate representation of drug costs in Medicare Advantage plans
- • Better Drug Selection: Improved selection of high-cost drugs for negotiation
- • Equitable Treatment: More equitable treatment between MA and traditional Medicare
Vaccine Treatment Updates
The guidance addresses how CMS will identify vaccines for infectious diseases based on their antigen components. While vaccines remain eligible for negotiation, this approach recognizes the dynamic nature of vaccine development.
Timeline and Implementation
Understanding the timeline is crucial for Medicare beneficiaries planning their prescription drug coverage:
Key Dates:
February 1, 2026
Drug Selection: CMS announces up to 15 additional drugs for negotiation
2026
Negotiation Phase: Third cycle of negotiations occurs
January 1, 2028
Implementation: Negotiated prices take effect for Medicare beneficiaries
How This Affects Your Prescription Drug Costs
For Medicare beneficiaries, the drug price negotiation program has the potential to significantly reduce out-of-pocket costs for high-expenditure medications. Here's what you should know:
Potential Benefits:
- • Cost Reduction: Lower negotiated prices for high-cost drugs
- • Out-of-Pocket Savings: Reduced costs for Part D and Part B drugs
- • Predictable Expenses: More predictable prescription drug expenses
- • Better Access: Improved access to expensive but necessary medications
What to Consider:
- • Limited Scope: Negotiations focus on highest-expenditure drugs
- • Selective Application: Not all drugs will be subject to negotiation
- • Future Implementation: Prices won't take effect until 2028
- • Current Coverage: Your current plan may already provide good coverage
What This Means for Medicare Part D and Part B
The guidance affects both Medicare Part D (prescription drug coverage) and Part B (medical services including some drugs administered by healthcare providers):
Part D Impact:
- • Formulary Application: Negotiated prices will apply to covered drugs in your formulary
- • Overall Savings: Lower drug costs may reduce your overall Part D spending
- • Catastrophic Coverage: Could help you reach the catastrophic coverage threshold faster
- • Coverage Gap: May reduce the impact of the coverage gap (donut hole)
Part B Impact:
- • Office-Administered Drugs: Drugs administered in doctor's offices may see price reductions
- • Specialty Treatments: Cancer treatments and other specialty drugs could become more affordable
- • Coinsurance Reduction: Reduced coinsurance amounts for expensive Part B drugs
- • Data Integration: Better integration with Medicare Advantage encounter data
What Medicare Beneficiaries Should Do Now
While the negotiated prices won't take effect until 2028, there are steps you can take now to prepare and potentially benefit from these changes:
Immediate Actions:
- • Review Current Coverage: Review your current prescription drug coverage
- • Track High-Cost Medications: Keep track of high-cost medications you take
- • Stay Informed: Monitor which drugs are selected for negotiation
- • Consider AEP 2025: Evaluate your coverage options during AEP 2025
Long-term Planning:
- • Monitor CMS Updates: Track CMS announcements about selected drugs
- • Understand Cost Impact: Learn how negotiated prices will affect your costs
- • Strategic Planning: Consider how this fits into your overall Medicare strategy
- • Stay Updated: Monitor future guidance releases
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Important Legal Disclaimer
Disclaimer: This information is provided for educational purposes only and is based on publicly available CMS guidance. Medicare beneficiaries should consult with licensed insurance professionals and healthcare providers to understand how these changes may specifically affect their individual coverage and prescription drug costs. American Senior Choices is not affiliated with CMS or the federal government. All Medicare plan information should be verified with official sources.
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