IRA Implementation and PBM Reform Take Center Stage on CMS Drug Pricing Menu

The Centers for Medicare & Medicaid Services (CMS) has released a comprehensive proposed rule and a Request for Information (RFI) aimed at advancing drug pricing reforms under the Inflation Reduction Act (IRA) and the Consolidated Appropriations Act of 2026. These actions seek to codify existing guidance for the Medicare Drug Price Negotiation Program and enhance transparency within the pharmacy benefit manager (PBM) sector. For the pharmaceutical industry, these developments signal a tightening of regulatory oversight and a formalization of the processes used to determine maximum fair prices for prescription medications.

On June 12, 2026, CMS issued a proposed rule exceeding 400 pages that primarily focuses on codifying existing guidance and introducing technical updates to the Medicare Drug Price Negotiation Program. These changes are slated to take effect for price applicability year 2029, representing a significant step in the long-term implementation of the IRA. The rule addresses the administration's ongoing priority of reducing prescription drug costs, a focus that has persisted from the Trump administration’s first term through current policy initiatives, including most favored nation policies and the drug supply chain provisions found in the Consolidated Appropriations Act, 2026 (CAA 2026).

A central component of the new proposal involves the renegotiation of drug prices. Under the IRA, CMS is authorized to renegotiate the prices of drugs that already have an established maximum fair price (MFP). The administration has already initiated this process by selecting the first drug for renegotiation as part of the price applicability year 2028 announcements. The proposed rule seeks to codify the specific criteria for selecting drugs for renegotiation, the formal negotiation process, and the dates when these newly negotiated prices will become effective. Notably, the rule would require CMS to consider the previously agreed-upon MFP as a baseline factor during any subsequent renegotiation proceedings.

The proposed rule also introduces modifications to the eligibility criteria for drug negotiations, specifically targeting combination drugs that contain two or more active ingredients. While CMS currently treats each combination drug as a separate entity for negotiation-eligibility purposes, the new proposal seeks to modify this treatment to refine how these products are handled. Additionally, the administration is moving forward with pharmacy benefit manager (PBM) reforms as part of the Consolidated Appropriations Act, 2026. This includes a Request for Information (RFI) regarding PBM transparency, signaling a comprehensive effort to regulate the drug supply chain and impact how pharmaceutical products are priced and distributed.