Today, the Centers for Medicare and Medicaid Services (CMS) released the results from the Medicare Drug Price Negotiation Program for Initial Price Applicability Year (IPAY) 2027 (press release).
What was the average reduction in drug prices?
Across the 15 drugs included in the 2027 negotiation, on average, drug prices fell by 62% (median: 63%); accounting for number of Medicare enrollees who received the medication, the price impact–accounting for population size–was somewhat larger: 73%.
How did price declines vary by drug?
The largest price declines were for Janumet/Janumet XR (85%) for the treatment of type 2 diabetes; the smallest price reduction was for Austedo/Austedo XR (38%) for the treatment of chorea in Huntington’s disease and tardive dyskinesia. I summarized the impact with the chart below.
What factors did CMS take into account when setting these prices?
Factors listed at section 1194(e)(1): manufacturer-submitted data on research and development costs and the extent to which such costs were recouped, prior federal financial support, unit costs of production and distribution, market/revenue/sales data, and information on patents, FDA exclusivities, and FDA applications and approvals.Factors listed in section 1194(e)(2): evidence about alternative treatments (including therapeutic advances, prescribing information, comparative effectiveness, and unmet medical need), CMS considered information from a wide variety of sources, including: information submitted by participating drug companies, people with Medicare, academic experts, clinicians, caregivers, and other interested parties in response to Information Collection Requests issued for the Negotiation Program; information provided at the patient-focused roundtable events and the town hall meeting hosted by CMS in the Spring of 2025; information shared by participating drug companies during meetings with CMS; and information CMS identified from its own literature searches, including from clinical guidelines and published studies.
How did the negotiation take place?
For eight of the selected drugs, this process of exchanging revised offers and counteroffers resulted in CMS and the participating drug company reaching an agreement on a negotiated price for the drug in a negotiation meeting or via additional price exchanges outside of a negotiation meeting. In seven of these cases, CMS accepted a revised counteroffer proposed by the participating drug company. For the remaining seven selected drugs, CMS sent a written final offer to those participating drug companies, consistent with the process described in its guidance, and in each instance, the participating drug company accepted CMS’ written final offer on or before the statutory deadline.
You can find more information on the negotiation process at the CMS website with negotiated price results summarized here.
