Healthcare & Life Sciences: Drug Pricing Digest — Number 60

Inflation Reduction Act, Healthcare Reform, and General Developments

CMS PUBLISHES MAXIMUM FAIR PRICES FOR 2027 

On November 25, 2025, the Centers for Medicare & Medicaid Services (CMS) published the maximum fair prices (MFPs) for the second group of drugs that were subject to the Inflation Reduction Act (IRA) negotiation program. The MFPs for these 15 drugs will become effective for Initial Price Applicability Year (IPAY) 2027. A price was published for each of the 15 drugs, meaning that all manufacturers reached agreement with CMS.

Addressing possible concerns about patient access to drugs with an MFP, CMS states that “as required by law, Medicare prescription drug plans, including standalone Part D plans and Medicare Advantage-prescription drug plans, must include in their formularies the selected drugs.” The agency noted, “CMS will use its comprehensive formulary review process … to assess any practices that may undermine access to selected drugs.”

Sources: BloombergLaw, PoliticoPro, BioWorld (first, second), Scrip (first, second), InsideHealthPolicy, Pink Sheet, StatNews (first, second).

Commenters discussed how these new MFPs may overlap with previously announced most favored nation (MFN) deals.

Sources: BloombergLaw (first, second), InsideHealthPolicy, Pink Sheet.

Join the Latham team and guest Eliza Biedziak from Ernst & Young LLP for the latest episode of the Latham Drug Pricing and Market Access Podcast, where we discuss what to expect from a government pricing assessment, the role assessments play in compliance, and how assessments can uncover strategic opportunities.

INTERNATIONAL MFN IMPACT COMES INTO FOCUS WITH US, UK AGREEMENT

On December 1, 2025, the Trump administration announced that it had reached an “agreement in principle” with the United Kingdom regarding drug prices. As described in the announcement, the UK “will reverse the decade-long trend of declining National Health Service (NHS) expenditures on innovative, life-saving medicines, and increase the net price it pays for new medicines by 25%.” Additionally, the UK “will ensure that higher prices for new medicines are not materially eroded by a demand for portfolio-wide concessions under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) or other rebate schemes.”

The statement goes on to explain that “in exchange for these and other commitments, the United States has agreed to exempt U.K.-origin pharmaceuticals, pharmaceutical ingredients, and medical technology from Section 232 tariffs and will refrain from targeting U.K. pharmaceutical pricing practices in any future Section 301 investigation for the duration of President Trump’s term.”

Sources: PoliticoPro, BBC News, The Guardian, The Telegraph.

Register for the December 11 Latham webcast “2025 Year in Review: A Look Back (and Look Ahead) at the Trump Administration’s Priorities.”

IRA LEGAL CHALLENGES CONTINUE

Drug manufacturer litigation against the IRA drug-pricing negotiation program continues.

Sources: InsideHealthPolicy, Law360, BloombergLaw (first, second).

Medicaid Drug Rebate Program (MDRP)

No developments to report.

340B Program

340B REBATE MODEL DEVELOPMENTS

Litigation regarding 340B rebate models continues at the appellate level. 

Sources: Law360, BloombergLaw, 340B Report (first, second).

Following questions about FAQs posted by the contractor retained by the Health Resources & Services Administration (HRSA) to administer the rebate models, an HRSA spokesperson reportedly stated that “HRSA does not intend for the implementation of the 340B Rebate Pilot to impose new restrictions on which prescriptions are eligible to be filed with 340B drugs.” We discussed the implementation by the contractor in issue No. 59 of this digest.

Source: 340B Report.

Meanwhile, stakeholders continue to discuss implications of the rebate model, with a major pharmacy chain reportedly excluding drugs subject to the model from its contract pharmacy program. 

Sources: BloombergLaw (first, second), 340B Report.

MANUFACTURER CHALLENGES TO STATE 340B LAWS CONTINUE

Drug manufacturer litigation challenging the 340B laws enacted by various states continues.

Sources: 340B Report (first, second, third).

Medicare Part B

CMS RELEASES 2026 OUTPATIENT PROSPECTIVE PAYMENT SYSTEM (OPPS) FINAL RULE

The 2026 OPPS final rule, which CMS released on November 21, 2025, was published in the Federal Register on November 25, 2025. We discussed the OPPS proposed rule in issue No. 51 of this digest. 

Among other things, the OPPS final rule addresses how CMS will reduce future payments to hospitals for services to “offset” the payments CMS previously made to 340B-covered entities as part of unwinding the Part B payment methodology that was struck down by the Supreme Court. We discussed the Court’s decision in issue No. 30 of this digest. CMS maintains the previously finalized approach for next year but signals more severe adjustments ahead. For CY 2026, CMS will apply the already-codified 0.5% reduction to the OPPS conversion factor for non drug items and services (excluding hospitals that enrolled in Medicare after January 1, 2018) to prospectively offset the roughly $7.8 billion in higher OPPS payments for non drug items and services made in 2018–2022 that resulted from the vacated 340B policy. CMS indicates it anticipates adopting a larger reduction (e.g., about 2% or more) beginning in CY 2027 through future rulemaking. 

CMS also finalized a targeted, site neutral step with direct implications for infused and injected therapies. Drug administration services furnished by excepted off campus PBDs (PO modifier) will be paid at PFS equivalent rates starting in 2026, with an exemption for rural Sole Community Hospitals off campus PBDs. CMS estimates this non budget neutral change will reduce OPPS spending by roughly $290 million in 2026 and may influence site of care dynamics for buy and bill products. 

CMS confirmed two developments related to outpatient drug payment policy. First, CMS will conduct an OPPS hospital drug acquisition cost survey in early 2026 (collecting NDC level net acquisition costs, including 340B and non 340B) with the intent to use the results to inform policy starting with the CY 2027 OPPS/ASC proposed rule — potentially shifting some payment away from ASP-based rates when robust cost data exist. Second, CMS is enforcing the statutory linkage between Medicare Part B payment and Medicaid rebate participation: Where a manufacturer lacks a Medicaid National Drug Rebate Agreement (NDRA), CMS will assign affected HCPCS codes a non payable status effective April 1, 2026, under OPPS/ASC, and will reinstate payment once an NDRA is executed, retroactive to the NDRA’s effective date. CMS finalized the list of HCPCS codes for which Medicare Part B payment will stop on April 1, 2026, unless the manufacturer has entered into an NDRA.

Finally, CMS continues separate payment for qualifying non opioid treatments for pain relief in both HOPD and ASC settings through December 31, 2027, consistent with statute, and finalized a set of qualifying drugs and devices for CY 2026. CMS also indicates it may move to a more frequent (e.g., quarterly) pathway to add products that newly meet the criteria, with payment made retroactive to the date a product qualifies (no earlier than January 1, 2026). 

Sources: BioWorld (first, second), BloombergLaw (first, second, third), InsideHealthPolicy (first, second, third), StatNews, 340B Report.

CMS RELEASES DMEPOS COMPETITIVE BIDDING FINAL RULE

On November 28, 2025, CMS issued the CY 2026 Home Health Prospective Payment System final rule, which, among other key policies, finalizes significant changes to the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP). CMS also issued a DMEPOS CBP fact sheet. Under the final rule, certain continuous glucose monitors (CGMs) and insulin infusion pumps, along with their necessary supplies and accessories, will be furnished under the DMEPOS CBP for the first time. 

Sources: HME Business, HME News, Medtrade.

Medicare Part D

CMS PROPOSES REGULATION IMPLEMENTING IRA PROVISIONS 

On November 25, 2025, CMS published a proposed rule that, among other things, continues implementation of changes to the Part D benefit pursuant to the IRA. The comment period ends on January 26, 2026.

Source: BloombergLaw.

State Law Developments

MARYLAND PDAB CONSIDERS USING MFP

The Maryland Prescription Drug Affordability Board (PDAB) is considering methodologies for imposing upper payment limits (UPLs). Reportedly, one option under consideration is using the MFP negotiated under the IRA.

Source: InsideHealthPolicy.