Today, the Centers for Medicare & Medicaid Services (CMS) released the results of the Medicare Drug Price Negotiation Program for Initial Price Applicability Year (IPAY) 2027 (Press release).
What was the average reduction in drug prices?
Among the 15 drugs included in the 2027 negotiations, drug prices fell by an average of 62% (median: 63%); Taking into account the number of Medicare enrollees receiving the drug, the price effect—taking into account population size—was somewhat larger: 73%.
How did price drops vary by drug?
The largest price decline was 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’ve summarized the impact with the chart below.
What factors did CMS consider when setting these prices?
- Factors listed in section 1194(e)(1): Manufacturer-submitted data on research and development costs and the extent to which such costs were offset, prior federal financial support, unit costs of production and distribution, market/revenue/sales data, and information on patents, FDA specifications, and FDA applications and approvals.
- Factors listed in section 1194(e)(2): Evidence about alternative treatments (including clinical advances, prescribing information, comparative effectiveness, and unmet medical need), CMS considered information from a variety of sources, including: information submitted in response to information collection requests issued by participating drug companies, people with Medicare, academic experts, physicians, caregivers, and other interested parties to the Conversation Program; Information provided at patient-focused roundtable events and town hall meetings hosted by CMS in the spring of 2025; Information shared by participating pharmaceutical companies during meetings with CMS; Further information CMS identified from its own literature searches, including clinical guidelines and published studies.
How did the conversation happen?
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 the negotiated price for the drug either in a negotiation meeting or through an additional value exchange outside a negotiation meeting. In seven of these cases, CMS accepted a revised counterproposal proposed by the participating drug company. For the remaining seven selected drugs, CMS sent participating drug companies a written final offer that was consistent with the process described in its guidance, and in each instance, the participating drug company accepted CMS’s written final offer on or before the statutory deadline.
You can find more information about the negotiation process on the CMS website, here is a summary of the price results of the negotiations.
