Last Friday, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to codify the Medicare Drug Price Negotiation Program created by the Inflation Reduction Act (IRA). This rulemaking was required by the IRA: Congress asked CMS to implement the early years of the program through guidance but directed the agency to move toward notice-and-comment rulemaking for later years. The proposed rule would begin applying with initial price applicability year 2029, turning the program’s early guidance-based structure into a more formal regulatory framework. While the rule doesn’t introduce radical policy changes, it is noteworthy nonetheless because it makes the program more permanent.

Much of the proposal is procedural. CMS would codify how it identifies negotiation-eligible drugs, ranks high-spending single-source products, enters agreements with manufacturers, collects manufacturer-submitted data, and conducts the offer-and-counteroffer process. The rule would formalize how CMS publishes maximum fair prices (MFPs), explains those prices, handles renegotiation, applies civil monetary penalties, and determines when a selected drug may be removed from the program due to a generic or biosimilar being marketed.

The rule would also address several more specific implementation issues. CMS proposes a policy for certain fixed-combination drugs, under which the agency could treat related dosage forms and strengths as part of the same selected drug when they share an active ingredient or component and are held by the same novel drug application or biologic license application holder. The stated purpose is to prevent any avoidance of the negotiation program through new formulations that add a new component to permit a different route of administration.

CMS further proposes to implement the IRA’s temporary floor for qualifying small biotech drugs in 2029 and 2030. Under that policy, CMS could not offer or agree to an MFP below a specified statutory floor for eligible small biotech products. In addition, the rule would codify Part D requirements related to selected drugs, including formulary inclusion rules and the requirement that the negotiated price used for Part D payment not exceed the MFP plus dispensing fees.

As an implementation document, the proposal is detailed and largely unsurprising. CMS is attempting to create a more durable administrative process for drug selection, manufacturer engagement, pricing determinations, and plan compliance. But the mechanics of the rule should not obscure the broader policy issue. The regulation is not just organizing paperwork around a Medicare program; it is further institutionalizing price setting for prescription drugs.

Understanding the institutionalization of MFPs in Medicare is important because the “negotiation” framework is not a normal market negotiation. In ordinary commercial negotiations, both parties can walk away from the table. Under the IRA, the federal government selects the products, defines the process, controls the timeline, determines the evidence it will consider, and imposes steep consequences for manufacturers that do not participate. Supporters may argue that this structure is still a negotiation, but the compulsory architecture of the program makes that claim difficult to sustain. The result may be described as a maximum fair price, but it is still a government-set price.

Price setting can create the appearance of immediate savings, particularly when policymakers compare the new regulated price to a prior list price or prior Medicare spending (see: press releases announcing each year’s MFPs). Yet those comparisons do not capture the full economic tradeoff. When government policy reduces the upside for successful products, especially high-spending products that may eventually become targets for negotiation, it changes the incentive structure for research and development. The result is unlikely to be a sudden collapse in drug innovation, but a slower accumulation of forgone projects (including expanded labels), narrower investment decisions, and fewer marginal therapies that ever reach patients.

The fixed-combination proposal illustrates another common feature of price-setting regimes: Once the government creates a controlled price, it must keep expanding the rules needed to defend that price. Product formulations, lifecycle management decisions, biosimilar entry, acquisitions, data submissions, and plan formularies all become relevant to maintaining the integrity of the regulated pricing system. From CMS’ perspective, these policies may be necessary to administer the statute. From a market perspective, they show how quickly price regulation spreads beyond the initial act of setting a price.

The promised benefits of the Medicare Drug Price Negotiation Program are also not being realized in a clear or comprehensive way – which makes any action toward permanence premature. The IRA was enacted in 2022, but the first negotiated prices only took effect in 2026. Much of the savings discussion so far has relied on estimates of what Medicare would have saved if negotiated prices had applied in earlier years. The proposed rule is even further removed from current patient experience: It governs the process for prices that will not take effect until 2029. In the meantime, plans continue adjusting to the redesigned Part D benefit, and policymakers continue to rely on administered prices rather than reforms that would promote stronger competition.

As noted from the start, the proposed rule does not make radical changes to the Medicare negotiation program, but it is nevertheless important because it makes the program more permanent. It turns initial implementation guidance into a standing regulatory apparatus. CMS may be creating a more orderly process, but an orderly price-control regime is still a price-control regime. And an orderly price-control regime does not answer the central objection: drug affordability should be advanced through competition, innovation, and market discipline, not by entrenching federal price setting as a routine feature of the prescription drug market.

Chart Review: Spike in Early-onset Colorectal Cancer Requires Attention

Evan McLaughlin, Health Policy Intern

Colorectal cancer (CRC) is now the leading cause of cancer-related death among adults under age 50, even as incidence rates for older adults continue to fall. Data from the National Cancer Institute (NCI) show a nearly 80-percent increase among adults under age 50 since 1975, alongside a 25-percent decrease for ages 50–64 and a 60-percent decrease for ages 65+. While improved diagnostic detection may account for part of the recent uptick in CRC diagnosis in those under 50, this divergence suggests a shift in underlying risk specific to the younger generation. Emerging research points to two potential contributors: higher consumption of ultra-processed foods, which have been linked to higher CRC risk through chronic gut inflammation, and microplastics exposure, which can disrupt the colon’s protective mucus barrier. Established risk factors – such as poor diet, obesity, sedentary lifestyle, and drug use – are relevant to CRC incidence but not unique to the under-50 age group.

Given this trend, public health research at agencies such as the National Institutes of Health and the NCI should prioritize analyzing early-onset CRC causes. At the same time, providers should maintain the recently lowered screening age of 45 for CRC suggested by the U.S. Preventive Services Task Force. Deepening the evidence base for causes of early-onset CRC, as well as sustaining robust detection practices for younger generations, is a promising path toward reversing this trend.