Medicare drug price negotiation: Preparing for maximum fair prices and their systemwide impact
Jamie Miller
The passing of the Inflation Reduction Act included a provision allowing the Centers for Medicare & Medicaid Services (CMS) to negotiate maximum fair prices (MFPs) for specific drugs covered under Medicare Part D. The goal is to make medications more affordable for Medicare members and reduce overall costs for the Medicare program. This marks a historic shift in federal drug pricing policy, giving CMS direct authority to negotiate prices for high-cost medications. The first MFP list of drugs takes effect on Jan. 1, 2026. For that year, the list includes 10 drugs:
• Eliquis
• Entresto
• Fiasp
• Januvia
• Stelara
• Enbrel
• Farxiga
• Imbruvica
• Jardiance
• Xarelto
For 2027, CMS has selected 15 more drugs, which include a mix of Part D and Part B medications. These selections are based on total Medicare spending and lack of generic or biosimilar competition.
CMS has placed specific requirements on health plans regarding MFP drugs. Health plans must include MFP drugs on their formularies. If a generic or biosimilar is available, plans may cover that alternative instead of the original MFP drug. However, plans are still permitted to apply utilization management tools such as prior authorization and step therapy to MFP drugs, provided these tools are clinically justified and compliant with CMS guidance.
Dispensing pharmacies must also meet new requirements to prepare for the implementation of MFP drugs. Pharmacies must enroll in the Medicare Transaction Facilitator (MTF) system to receive manufacturer refund payments for MFP drugs they dispense. The MTF consists of 2 modules: a data module (MTF DM) for submitting claims and a payment module (MTF PM) for receiving refunds. Enrollment is mandatory for any pharmacy participating in Medicare Part D networks, and failure to enroll may result in exclusion from dispensing MFP drugs.
While the MFP program is expected to reduce costs for Medicare beneficiaries, its impact on other lines of business remains uncertain. Some analysts have hypothesized that manufacturers may offset losses from Medicare negotiations by increasing prices for commercial payers or reducing rebates. Others suggest that the program could lead to broader pricing reforms if adopted by other payers or states. As such, the ripple effects of MFP pricing could reshape the pharmaceutical landscape beyond Medicare.
Geisinger Health Plan (GHP) will continue to monitor the implementation and impact of the Medicare MFP program throughout calendar year 2026. This includes tracking changes in drug pricing, formulary dynamics and pharmacy reimbursement across all lines of business.
GHP remains committed to ensuring access to affordable medications while adapting to evolving regulatory and market conditions.
