Maximum fair prices (MFPs) for Medicare drugs are reshaping how formularies are decided, according to experts at the Academy of Managed Care Pharmacy Nexus 2026 meeting, where panelists discussed the impact of negotiated prices on formulary trends.
Under the Inflation Reduction Act’s Medicare Drug Price Negotiation Program, MFPs for 10 Medicare Part D drugs took effect on January 1, 2026, with reductions ranging from 38% to 79% off 2023 list prices. These reductions, detailed in a report by Mattina C., have significantly altered the cost environment for these medications.
Required Coverage Changes Formulary Trends
A proposed rule by the Centers for Medicare & Medicaid Services (CMS), as outlined by Joszt L., would permanently require Part D plans to include any drug with an MFP in effect on their formularies. This mandate ensures broader access to negotiated drugs but also constrains plan flexibility.
Hiva Pourarsalan, PharmD, of Aetna, noted that while the fundamentals of formulary evaluation remain unchanged, coverage decisions for MFP drugs are now predetermined by law. Plans must still aim to offer effective and affordable therapies, but the legal requirement for MFP drugs introduces a new layer of complexity.
Johnathan Toft, PharmD, MBA, of Lumanity, observed that plans have responded by cutting coverage of competing products in the same market basket, particularly among stand-alone prescription drug plans. This trend, though most pronounced in Part D, has also begun to affect Medicare Advantage Prescription Drug plans, with potential spillover into commercial formularies expected in the future.
Shifting Incentives and Creative Formulary Management
Lisa Cashman, PharmD, also of Lumanity, highlighted that incentives have shifted toward lower net-price products. CMS prohibits plan sponsors from favoring non-negotiated alternatives over MFP drugs, further emphasizing cost-effectiveness in formulary decisions.
Pourarsalan cautioned that the handling of therapeutic alternatives varies by drug class. Plans must balance required MFP coverage with the need to keep effective therapies available, often requiring more creative formulary management. This balancing act is key to maintaining patient access to necessary treatments.
Future Negotiations and Market Competition
The impact of MFPs is expected to grow as negotiations expand. A second cycle of 15 drugs will take effect in 2027, with Medicare Part B drugs included in the 2028 cycle. This expansion, as noted by Bonavitacola J., includes high-profile drugs like semaglutide, further broadening the program’s reach.
CMS proposes permanent rules for Medicare drug price negotiation, as reported by Joszt L., which will further solidify the role of MFPs in formulary decisions. Accessed November 3, 2026, these rules aim to provide stability and predictability in the negotiation process.
