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June 25, 2026 – On the list of critical health policy topics that policymakers are currently focused on, drug pricing is definitely towards the top. Reducing the price of prescription drugs has been a priority for the Trump administration since the president’s first term. While much of the public conversation on drug pricing right now is focused on the Trump administration’s most favored nation policies, the administration also continues to implement two major laws related to drug pricing and the drug supply chain: the Inflation Reduction Act (IRA) and the pharmacy benefit manager (PBM) provisions in the Consolidated Appropriations Act, 2026 (CAA 2026). Over the last few weeks, the Centers for Medicare & Medicaid Services (CMS) has released:
To dig into the rule and RFI, I’m handing this week’s Regs & Eggs over to my fellow chefs, Amy Kelbick and Lynn Nonnemaker.
On June 12, 2026, CMS issued a more-than-400-page rule that essentially proposes to codify existing guidance documents. It also makes technical changes and updates to the Medicare Drug Price Negotiation Program that would go into effect for price applicability year 2029. Here are some key proposals in the rule:
The IRA allows CMS to renegotiate the price of drugs that have an established maximum fair price. The Trump administration selected the first drug for renegotiation when it announced the selected drugs for price applicability year 2028. CMS proposes to codify:
These policies align with the process currently underway for renegotiation of CMS’s selected drug, with one update to require CMS to consider the agreed-upon maximum fair price for a drug selected for renegotiation as part of the process.
The rule proposes a modification to how combination drugs, which are drugs that contain two or more active ingredients, will be treated for purposes of being negotiation-eligible. Currently, CMS treats each combination drug as a separate single-source drug. Only single-source drugs (drugs without bona fide competition) that are either seven or nine years post-US Food and Drug Administration approval are eligible for the negotiation program. CMS is concerned that approaching combination drugs as separate from a drug with the same active ingredient may create a program integrity risk that drug manufacturers could exploit to keep their drugs from being selected and is counter to the statute, which requires CMS to identify qualifying single-source drugs by aggregating across drug dosage forms and strengths, including new formulations of the drug. Under this proposed rule, if CMS determines that a fixed combination drug’s additional active ingredients provide an alternative route for administration of the original active ingredient, but on their own don’t add clinical benefit, CMS would identify a potential qualifying single-source drug using all dosage forms and strengths of the drug or biological product.
The IRA exempted small biotech drugs from the negotiation program for initial price applicability years 2026, 2027, and 2028. Starting in price applicability year 2029, CMS proposes to implement the temporary floor for small biotech drugs (as required by law), which would limit CMS from offering or agreeing to a counteroffer for a maximum fair price below that floor for certain eligible drugs.
The new policies proposed in this rule would apply to drugs selected for negotiation beginning with the 2029 initial price applicability year. Drugs selected for initial price applicability years 2026 – 2028 would remain subject to rules specified through existing subregulatory guidance. However, CMS states that once any provisions finalized through this rulemaking take effect in 2029, they would apply to drugs selected for initial price applicability years 2026 – 2028. For example, if a drug selected for 2027 was renegotiated in 2029, these policies would apply.
On June 16, 2026, CMS issued an RFI on PBM compensation and data collection to gather stakeholder input for implementing new PBM transparency and compensation requirements enacted in Section 6224 of the CAA 2026. The RFI focuses on two provisions that take effect in calendar year 2028:
CMS asks for input on six areas, and will use the input received to inform future rulemaking in advance of the 2028 effective date.
Section 6224 of the CAA 2026 defines PBMs broadly as entities that negotiate drug prices or manage prescription drug benefits on behalf of Medicare Part D plans, including functions such as claims processing, utilization review, appeals adjudication, pharmacy network contracting, and cost control efforts. CMS seeks input on additional ways to identify PBMs, including:
For each category, CMS requests input on the following:
The law treats many affiliated entities as subject to the same compensation restrictions as PBMs and defines “affiliate” as any entity that is related to the PBM through ownership or performs PBM functions. CMS seeks input on whether the following should be considered PBM affiliates:
CMS also wants information about ownership relationships, contracting arrangements, services provided, sources of payment, and whether payments vary based on utilization, rebates, formulary status, or pricing benchmarks for each of the potential affiliates.
Under Section 6224 of the CAA 2026, PBMs and affiliates generally may only receive compensation that qualifies as a bona fide service fee (BFSF). Per the statute, a BFSF must reflect the fair market value for a necessary itemized service actually performed on behalf of the entity, and must not be passed on to a customer. The BFSF must be a flat dollar amount that is not tied to drug price, rebate amounts, formulary placement, referral volume, or other amounts specified by the secretary of the US Department of Health and Human Services. In the RFI, CMS asks stakeholders to identify:
Section 6224 of the CAA 2026 requires CMS to define “fair market value” for purposes of determining whether compensation arrangements between PBMs and Part D plan sponsors, pharmacies, or manufacturers meet the definition. CMS seeks input on:
The Social Security Act specifies that Part D sponsors are not prohibited from using flat dispensing fees or reimbursement based on ingredient costs. In the RFI, CMS asks for input on what current pharmacy payment or compensation arrangements meet either of these two descriptions, and what current pharmacy payment arrangements do not fall into either category.
Beginning in 2028, PBMs must submit annual reports to both CMS and Part D sponsors containing detailed information on:
CMS seeks input on additional data elements that would help support oversight and implementation of the law.
Both the proposed rule and the RFI send a strong signal that CMS is committed to carrying out its priority of reducing drug costs through implementation of both the IRA’s Medicare Drug Price Negotiation Program and the PBM reforms included in the CAA 2026. Stakeholders are currently reviewing both regulatory documents and deciding if and how to comment. Comments on the RFI are due July 20, 2026, and comments on the proposed rule are due August 17, 2026. Feel free to reach out if you have questions about the rule and RFI!
Until next time, this is Jeffrey (and Amy and Lynn) saying, enjoy reading regs with your eggs.
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