On May 12, 2025, the Centers for Medicare & Medicaid Services (CMS) released Draft Negotiation Guidance that outlines potential procedural and operational steps for implementing the Medicare Drug Price Negotiation Program under the Inflation Reduction Act. The draft guidance details how CMS will identify drugs for negotiation, engage manufacturers, determine a “maximum fair price” (MFP), and incorporate stakeholder input. The guidance emphasizes transparency, timelines, data submission requirements, and confidentiality protections.
Another Try at Fair Price
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Key provisions include the selection process for qualifying single-source drugs with the highest Medicare spending and exclude certain orphan, low-spend, and small biotech drugs. Selected drug manufacturers must submit detailed data packages, including R&D costs, sales volume, and market data. CMS will review this information alongside independent analyses to propose an initial MFP. Manufacturers are encouraged to participate in structured negotiations that include written proposals, counterproposals, and justification for pricing.
CMS outlines factors that will influence the MFP, including therapeutic alternatives, clinical benefit, unmet needs, federal investments, and manufacturing costs. The guidance also details dispute resolution mechanisms, timelines for public comment, and the role of patient and provider feedback.
Importantly, the MFP will apply across Medicare Parts B and D, and CMS will monitor manufacturer compliance and may impose penalties for noncompliance. Stakeholder engagement is prioritized, with mechanisms for public input, and CMS commits to iterative refinement of negotiation methodologies. The document concludes by reaffirming CMS’s commitment to balancing innovation, access, and affordability in drug pricing policy.