By Jonathan Gardner
Published June 15, 2026
The federal government has taken a significant step toward tightening its oversight of pharmaceutical pricing strategies, introducing a proposed rule that could fundamentally alter how Medicare approaches drug price negotiations for the 2029 cycle. The proposal, unveiled by the Centers for Medicare & Medicaid Services (CMS) on June 12, 2026, explicitly aims to close a regulatory “loophole” that has allowed pharmaceutical manufacturers to insulate new drug formulations from the price-setting mechanisms established by the Inflation Reduction Act (IRA).
As Medicare enters its fourth year of price negotiations, this latest regulatory maneuver signals a shift in the government’s posture toward the industry’s “evergreening” tactics—specifically, the practice of transitioning patients from intravenous (IV) therapies to newer, subcutaneous (under-the-skin) delivery methods just as patent protections on the original product begin to sunset.
Main Facts: The 2029 Negotiation Framework
At the heart of the proposed rule is the intent to ensure that Medicare negotiations capture the full economic value of a pharmaceutical product, regardless of minor delivery-system modifications. Under the current IRA framework, CMS selects a group of high-expenditure, single-source drugs for price negotiation. However, manufacturers have historically utilized the transition to subcutaneous formulations to reset their competitive footing.
The new rule clarifies that CMS intends to maintain the integrity of its price-protection mandate by preventing companies from shielding these “next-generation” formulations from the negotiation process. While the rule does not explicitly target specific brands, industry observers widely agree that it is designed to address the looming market transitions of some of the world’s most profitable blockbuster drugs. By ensuring that price negotiations apply to the broader product line rather than just the legacy IV version, the government aims to prevent pharmaceutical firms from effectively “bypassing” the IRA’s cost-containment measures.
Chronology of the Negotiation Program
The trajectory of Medicare’s price negotiation program has been rapid and transformative, reshaping the landscape of American healthcare finance:
- August 2022: The Inflation Reduction Act is signed into law, granting Medicare the unprecedented authority to negotiate prices for certain high-cost prescription drugs.
- 2026: The first round of negotiated prices, covering ten initial drugs, officially goes into effect, marking a historical milestone for the U.S. healthcare system.
- June 2026: CMS releases the proposed rule for the 2029 negotiation cycle, signaling a tightening of criteria regarding drug formulations and biosimilar competition.
- February 1, 2027: The official date by which CMS is mandated to release the list of 20 drugs subject to negotiation for the 2029 calendar year.
- 2028: The anticipated expiration of patent protections for several high-revenue oncology drugs, setting the stage for potential biosimilar entry.
- 2029: The year in which the newly negotiated prices resulting from this latest round will take effect.
Supporting Data: The Blockbuster Landscape
The stakes for the 2029 negotiation cycle are exceptionally high, centered on some of the most widely used and expensive medicines in the Medicare portfolio. Among the drugs likely to be scrutinized are Bristol Myers Squibb’s Opdivo and Merck’s Keytruda.
In 2025, these two immunotherapies generated a staggering combined global revenue of approximately $41 billion. Because both drugs are indicated for a vast array of cancers—ranging from non-small cell lung cancer to melanoma—they represent a significant portion of Medicare’s annual Part B and Part D expenditures.
The strategy employed by these manufacturers is clear: as their original IV-based patents approach expiration in 2028, the companies have aggressively developed subcutaneous formulations. These versions offer a dual advantage: they provide clinical convenience for patients and efficiency for healthcare facilities struggling with the logistics of lengthy IV infusions, while simultaneously acting as a defensive patent strategy.
According to market analysis, the transition to these newer versions is intended to sustain revenue streams well into the next decade. However, the federal government’s proposed rule seeks to ensure that these commercial pivots do not serve as a shield against the cost-savings mandates of the IRA.
Implications for Stakeholders
For Pharmaceutical Manufacturers
The industry faces a period of heightened uncertainty. For companies like Merck and Bristol Myers, the ability to successfully transition patients to newer formulations is no longer just a marketing strategy; it is a critical defensive maneuver against patent cliffs. The proposed rule suggests that CMS will treat the entire “franchise” of a drug as a single entity for negotiation purposes, effectively stripping away the protective layer that a new formulation previously provided.
For Healthcare Facilities
Infusion centers, which often operate on thin margins, may see a shift in operational workflows. While subcutaneous shots are faster and require less chair time than IV drips, the reimbursement structure for these drugs will likely be impacted by the federal negotiations. If the cost of the drug is suppressed through negotiation, the overall revenue profile of oncology services may shift, forcing facilities to re-evaluate their financial models.
For Medicare Beneficiaries
The primary goal of the IRA is to reduce out-of-pocket costs for seniors and those with disabilities. By preventing manufacturers from using formulation changes to keep prices high, CMS is effectively protecting the longevity and accessibility of these life-saving therapies. Patients can expect more stable pricing for their essential medications, even as those medications evolve technologically.
Official Responses and Market Analysis
The market’s reaction to the proposal has been one of cautious observation. Leerink Partners analyst David Risinger has noted that the inclusion of biosimilar competition triggers within the rule creates a complex, shifting landscape.
“We don’t know if [the timing of biosimilar entry] is soon enough to preclude CMS from selecting the subcutaneous versions of Opdivo and Keytruda,” Risinger noted in a recent client briefing. The uncertainty lies in whether the market entry of biosimilars in late 2028 will occur in time to meet the “deselection” criteria established by CMS. Under current guidelines, if a drug faces robust biosimilar or generic competition, it can be removed from the negotiation list. However, if the biosimilars arrive too late or fail to gain significant market share, the subcutaneous versions will remain firmly in the crosshairs of federal regulators.
Industry trade groups have historically argued that such rules stifle innovation, suggesting that if manufacturers cannot rely on the revenue from new, improved formulations, they will have less incentive to invest in R&D for better delivery methods. Conversely, patient advocacy groups and government officials argue that the practice of “evergreening” is a purely financial maneuver designed to maintain monopoly-level pricing rather than to provide genuine clinical advancement.
Conclusion: A New Era of Price Governance
The proposed 2029 rule represents a maturation of the federal government’s role in the pharmaceutical market. By addressing the nuances of product formulation and the tactics of patent life-cycle management, CMS is demonstrating a more sophisticated understanding of the “cat-and-mouse” game played by big pharma.
As the February 2027 deadline for the list of 20 targeted drugs approaches, the pharmaceutical industry will likely lobby heavily to narrow the definition of what constitutes a “negotiable” formulation. However, the current administration’s commitment to the IRA suggests that the days of using minor product shifts to bypass price negotiations are coming to a close. For the 65 million Americans enrolled in Medicare, this evolution in policy could mean the difference between affordable access to cutting-edge cancer treatments and a future defined by insurmountable drug costs.
As we move toward 2029, the industry remains at a crossroads: adapt to a reality where federal negotiation is a permanent feature of the business model, or face a legal and regulatory gauntlet that threatens the very blockbuster products that have defined the last decade of pharmaceutical success.
