Medicare Price Rules Reshape Part D Formularies
Plan sponsors and pharmacy benefit managers must now rebuild formularies around negotiated drugs that cannot be excluded.
Updated on Nov. 3, 2026 in Healthcare
Panelists at the Academy of Managed Care Pharmacy Nexus 2026 meeting described how Maximum Fair Prices (MFPs) under Medicare drug price negotiation are reshaping Part D formularies. Since January 1, 2026, Part D plans have covered the 10 negotiated drugs while cutting coverage of similar competing products, a shift most visible among stand-alone prescription drug plans.
Why it matters
Coverage of MFP drugs is required by law, so plans cannot exclude them and must instead restructure the rest of their formularies to keep effective therapies available. Incentives have shifted toward products with lower net prices, which changes which drugs plans and pharmacies can count on being covered.
Negotiated prices for 10 Medicare Part D drugs, effective January 1, 2026, reduce list prices by 38% to 79% off 2023 list prices. A second cycle covering 15 drugs takes effect in 2027, and the 2028 cycle will extend to Medicare Part B drugs.
The players
Centers for Medicare & Medicaid Services (CMS)
The federal agency that administers Medicare, sets Part D plan requirements, and runs the drug price negotiation program affecting plan sponsors nationwide.
Academy of Managed Care Pharmacy (AMCP)
The national professional association for managed care pharmacists, whose Nexus 2026 meeting hosted the panel discussing MFP effects on formularies.
The details
CMS requires plan sponsors to cover every drug with an MFP in effect and prohibits them from discriminating against those drugs in favor of non-selected alternatives. Because coverage of the selected drugs is predetermined, plans have shifted their formulary decisions to the remaining products in each market basket, cutting coverage of similar competing drugs. A CMS proposed rule would make the MFP coverage requirement permanent for Part D plans.
Timeline
January 1, 2026: MFPs take effect for 10 Part D drugs.
2027: Negotiated prices for a second cycle of 15 drugs take effect.
2028: The negotiation cycle includes Medicare Part B drugs.
Market Landscape
The shift extends the Inflation Reduction Act's Medicare drug price negotiation provisions from negotiated prices into formulary design, changing how Part D plans compete. Spillover into commercial formularies is expected but has not yet appeared at scale.
Plan sponsors and pharmacy benefit managers should expect continued reshuffling of Part D formularies as each new negotiated drug is added. Pharmacy and procurement teams should track which competing products are losing coverage in their market baskets.
The takeaway
Formulary decisions now hinge less on the negotiated drugs themselves and more on how competing products fare within each market basket. Operators should monitor the CMS proposed rule making MFP coverage permanent and watch whether commercial formulary spillover begins.
What happens next
The second cycle of negotiated prices for 15 drugs takes effect in 2027, and the 2028 cycle will add Medicare Part B drugs.
Further reading
For context on how these pricing rules reach pharmacy benefit design, see more Healthcare coverage.
Source note: This article includes information reported by Ajmc.
