US Medicare Announces New Rules for Second Round of Drug Negotiations, According to Reuters

By Ahmed Aboulenein

The U.S. government has announced plans to extend negotiation timelines and provide additional opportunities for drug manufacturers to submit counter offers during the second round of discussions concerning price reductions for its Medicare program.

Importance of the Changes

The Centers for Medicare and Medicaid Services (CMS), which administers Medicare—the federal health insurance program for millions of Americans aged 65 and older, as well as those with disabilities—intends to select the most expensive prescription drugs for negotiation by February 1. The new prices are expected to take effect in 2027.

Pharmaceutical companies that produce the 15 medications likely to be selected for negotiation are closely monitoring these developments.

CMS has communicated that the negotiation process will undergo revisions, informed by feedback from patients and drugmakers. These changes will include earlier meetings with companies and more opportunities for them to propose counter offers.

Under the revised process, CMS will meet with drug manufacturers prior to issuing its initial price offer. One of the three designated negotiation meetings will occur before the deadline for the first counter proposal from the companies. Should a drugmaker choose to counter the government’s initial offer, it will be allowed two additional meetings for negotiation.

Key Insights

A representative from CMS stated, "What we plan to do is have meetings with manufacturers before CMS actually sends an initial offer. But then once we have done an initial offer, we will have a first optional negotiation meeting with the manufacturer earlier than we did this past year. This will allow us to engage in discussions regarding the initial offer and to hear any preliminary thoughts from the manufacturers about potential counteroffers."

Context

In August, CMS unveiled the prices for ten drugs in its first round of price reductions after a year of negotiations. These prices are slated to commence in January 2026, resulting in an estimated savings of $1.5 billion out of pocket for older Americans, as reported by the agency.

Looking ahead, negotiations for the upcoming year will occur within a tighter timeframe, with final pricing decisions expected by November 30, 2025.