On May 12, the Centers for Medicare & Medicaid Services (CMS) released draft guidance detailing the selection and negotiation processes for Medicare Part B and Part D drugs for Initial Price Applicability Year (IPAY) 2028. This guidance builds upon the framework established in previous years and introduces several key changes, including the eligibility of Part B drugs for selection.  

Key Changes for IPAY 2028

• Drug Selection and Eligibility: 
  • Part B Drug Inclusion: For the first time, Part B drugs will be eligible for selection. CMS will identify the top-50 Part B and Part D drugs separately before aggregating the lists and spending to identify the 15 drugs for IPAY 2028 negotiation. 
  • Small Biotech Exclusion (SBE): Manufacturers can apply for SBE under Part B and/or Part D tracks, with an exception granted if either track is met. The SBE application is drug-specific and, if granted, will make a drug ineligible for selection in IPAY 2028, the last year for SBE applications. 
  • Combination Drugs: CMS is seeking comments on how to treat drugs with additional active ingredients that affect bioavailability but are not biologically active against the disease. 
• Changes to the Negotiation Process: 
  • Ceiling Calculation: CMS proposed a methodology to incorporate Part B prices and utilization into ceiling calculations and estimate the 30-day equivalent supply for Part B drugs that differs from the current Part D methodology. 
  • Single Maximum Fair Price (MFP) across Part B and Part D: For drugs covered under Part B and Part D, CMS clarified that it will calculate a single MFP to use across formulations and benefit type. 
  • Therapeutic Alternative (TA) Considerations: CMS is seeking comments on proposed alternative methods for consideration of TAs when developing the initial offer starting point, including the evidence it will consider. In addition, CMS is seeking comment on whether and how to consider non-drug healthcare services when evaluating TAs.  
  • Data Collection: CMS seeks comment on the collection of additional market data that is “forward-looking” and overlaps with the period between selection and start of the IPAY. CMS provided two examples of the type of data that might be included and noted that these data are consistent with section 1194(e)(1)(E) language of “market data and revenue and sales volume data for the drug in the United States.” 
• Part B MFP Effectuation: CMS did not propose a standard default refund amount approach for Part B effectuation, leaving room for stakeholder input. However, CMS did note that it intends to align the process as closely as possible to Part D processes. Additionally, CMS did not describe the role of the Medicare Transaction Facilitator in Part B, but noted that Part B has different supply chain considerations that its effectuation processes. 
• Part D Formulary Management: CMS clarified that Part D sponsors may remove a selected drug if substituted with a generic or interchangeable biological product, subject to specific requirements. 
• Renegotiation Criteria: CMS clarified conditions for drug renegotiation, including changes in monopoly status or significant market changes that may result in a greater than 15% change in MFP.

Implications for Stakeholders 

Stakeholders have an important opportunity to engage CMS during this process to provide insight into the operationalization of guidance policies and access implications. Below are several stakeholder-specific business questions that are likely to shape response and comment strategy. 

• Manufacturers 
  • How will potential changes to the CMS definition of a combination product directly and indirectly impact the expected negotiation selection timing? What are the possible implications for the competitive market, pipeline planning, and forecasting? 
  • To what extent may CMS’s proposed 30-day price for Part B alternatives lower the expected starting point for selected drugs with Part B therapeutic alternatives? 
  • How can manufacturers shape the MFP effectuation process in Part B to minimize access disruptions?  
  • How could the Part B standard default refund amount (SDRA) impact manufacturer gross to net provider economics, and supply chain dynamics? Should manufacturers adjust volume-based rebates to account for Medicare beneficiaries eligible for MFP? 
• Payers 
  • To what extent may updated formulary management guidance shift management of negotiated products? 
  • How does introducing MFPs into the market impact non-Medicare plans based on current or future contract language, relative to the reimbursement mechanism? 
  • To what extent may plans align their preferred drugs across books of business (e.g., Medicare, commercial, etc.)?  
• Dispensing Entities and Part B Providers 
  • How will Part D effectuation impact the ability to stock and dispense negotiated drugs, given the lag in MFP-based reimbursement and the SDRA true-up? 
  • How will Part B effectuation impact Part B provider economics? How might this impact the ability to carry and supply negotiated products? 
  • Is there a preferred alternative SDRA method that mitigates the risk to provider economics? 
  • How might Group Purchasing Organization and distributor contracts change after part B effectuation? 
• Patients 
  • How will the Inflation Reduction Act (IRA) impact shared decision making and access to treatments? Will this change prompt patients to change drugs and/or how they receive them?  
  • What is the impact of MFP on out-of-pocket (OOP) cost? Is there a meaningful difference between the Part D OOP cap and the Medicare Prescription Payment Plan? How much will OOP cost change for negotiated drugs if patients use supplemental insurance to help pay for Part B drugs?  
  • What patient advocacy organizations are involved in IRA negotiation discussions? How can patients join these groups and participate in patient roundtable opportunities? 

Next Steps 
CMS invites public comment through June 26, 2025, to inform the final guidance. Several proposed changes, including the collection of forward-looking financial information and potential changes to factor weighting, indicate potential for additional downward pressure on MFPs. Manufacturer stakeholders should analyze the potential impact of these changes on their portfolios and consider submitting comments to shape policy and mitigate risks. Provider and patient stakeholders should consider how the unintended consequences of the IRA may impact access to care and their ability to continue to treat patients.  

Previous Avalere Health analyses have assessed the impact of MFP on provider reimbursement and potential spillover effects that can shed light on some unintended consequences of Part B negotiations. Connect with us to learn more about how Avalere Health supports client’s policy, access, pricing, contracting and channel strategy related to Part B negotiations.