On September 30, 2025, the Centers for Medicare & Medicaid Services (CMS) finalized guidance for the next stage of the Medicare Drug Price Negotiation Program. This guidance provides clarity on how drugs payable under Medicare Part B will be selected for negotiation, the criteria for renegotiation, and how manufacturers must implement the negotiated Maximum Fair Prices (MFPs).

One of the most notable provisions expands orphan drug protections, ensuring products designated for rare diseases by the FDA may be excluded from negotiation if all approved indications align with those rare conditions. This change aims to preserve incentives for continued research in the rare disease space, while maintaining negotiation requirements when broader use applies.

CMS also finalized its decision to integrate Medicare Advantage encounter data with traditional Fee-for-Service claims when calculating total expenditures under Part B. This step ensures greater equity in drug selection across both Medicare Advantage and traditional Medicare, marking a significant methodological update from prior draft guidance.

Another area of focus is the treatment of vaccines for infectious diseases. CMS will consider antigen components in determining whether vaccines qualify for negotiation, balancing price fairness with recognition of ongoing vaccine innovation.

With this guidance, CMS is setting the stage for its third negotiation cycle, slated to begin in 2026. Up to 15 additional drugs will be announced for inclusion, with newly negotiated prices taking effect on January 1, 2028.