On January 27, 2026, the Centers for Medicare and Medicaid Services (CMS) released the list of drugs selected for negotiation for Initial Price Applicability Year (IPAY) 2028 under the Medicare Drug Price Negotiation Program.¹ Established by the Inflation Reduction Act of 2022 (IRA), the program operates in successive phases: CMS selects eligible higher-spend drugs in advance of a given price applicability year, conducts a structured negotiation process with manufacturers, and applies the resulting maximum fair prices (MFPs) beginning in the designated price applicability year. For IPAY 2028, 15 additional drugs were selected for negotiation, including 10 drugs from Medicare Part D and five drugs from Medicare Part B, as seen in Figure 1. While this marks the third year of selection under the program established by the IRA, IPAY 2028 introduces two notable firsts:

• The inclusion of Part B drugs per the IRA
• The implementation of the expanded orphan drug exclusion to the drug selection process from H.R. 1 (the Budget Reconciliation Act of 2025)

These changes, along with the growing number of drugs selected across successive price applicability years, increase the complexity of forecasting future negotiation lists. The addition of Part B drugs per the IRA and statutory refinements from H.R. 1 have important implications for life sciences companies and other healthcare stakeholders seeking to proactively prepare for the impact of price negotiation on their organizations. In advance of the IPAY 2028 drug list release, Milliman used claims-based analyses, along with policy and clinical expertise, to evaluate how these changes were likely to influence drug selection. This work accurately anticipated the selected drugs and provided insight into how key provisions operate in practice. Building on that analysis and a detailed review of CMS’ selections, Milliman identified four key takeaways that highlight how eligibility rules are shaping selection and may inform expectations for future selection cycles.

Four key takeaways from the IPAY 2028 selected drug list

1. Many blockbuster drugs remain outside negotiation due to statutory exemptions.

Although most drugs selected for IPAY 2028 represent substantial Medicare spending, several of the largest blockbuster drugs, which generate over $1 billion in annual Medicare spending, are absent from the list. These exclusions are driven by statutory exemptions established under the IRA³ and H.R. 1.⁴

One of the most consequential exemptions is the H.R. 1’s expanded orphan drug exclusion, which exempts certain higher-spend therapies from negotiation eligibility based on their orphan designation and approval history. Under the IRA, a drug was excluded if it only had a single orphan drug designation. H.R. 1 broadened this exclusion by extending it to drugs with one or more orphan designations and approvals. It also reset the negotiation eligibility timeline for drugs with initial orphan drug designations, so that the applicable seven- or 11-year negotiation waiting period is measured from the approval date of the drug’s first non-orphan indication. The expansion of the orphan drug exclusion renders Darzalex (daratumumab) ineligible for negotiation under its current approvals and delays Opdivo (nivolumab) and Keytruda (pembrolizumab) until later price applicability years. According to their manufacturers’ annual reports, these drugs had over $6 billion,⁵ $5 billion,⁶ and $17 billion⁷ in 2024 total U.S. sales, respectively.

Additional statutory carve-outs further narrow the pool of drugs eligible for negotiation. Per the IRA, drugs are exempt from selection once a generic or biosimilar is approved and marketed, even if the reference product continues to account for most of the utilization or spending. Higher-spend drugs, such as Humira (adalimumab), Prolia (denosumab), and Eylea (aflibercept), are exempt from negotiation because of biosimilar entry. Plasma-derived products, such as Gammagard (immune globulin), are also excluded by the IRA. In addition, the small biotech exemption, applicable for IPAYs 2026 through 2028, temporarily excludes drugs that account for less than 1% of Part D spending but represent over 80% of a manufacturer’s Part D revenue, such as Ingrezza (valbenazine). Influenza vaccines, while not categorically excluded from the program, are also not subject to negotiation because their annual reformulation restarts the timing requirement for biologics each year.⁸ These exclusions reflect how eligibility rules set by the IRA and H.R. 1, rather than spending alone, will continue to determine which drugs are eligible for negotiation in future price applicability years.

2. Part D drugs continue to dominate the negotiation list despite Part B drugs now being eligible for selection.

Part B drugs are now eligible for selection under the program, yet the IPAY 2028 list is dominated by Part D drugs: 10 of the 15 selected drugs are either covered exclusively under Part D or derive most of their spending from Part D. Given that IPAY 2028 is the first year that Part B drugs are eligible for selection and 25 higher-spend Part D drugs were previously selected, IPAY 2028 was expected to skew toward Part B prior to H.R. 1. However, the expansion of the orphan drug exclusion pushed back the eligibility dates of several higher-spend Part B drugs, decreasing Part B representation. Ultimately, selection reflects the interaction between eligibility rules and statutory exemptions. The 2028 list suggests that Part B eligibility alone has not shifted the balance of negotiated drugs away from Part D, with statutory exclusions shaping selection outcomes.

3. In comparison to earlier IPAY lists, higher-cost drugs are more prevalent and some manufacturers are selected again.

The IPAY 2028 list includes more drugs with an average annual 2023 cost per patient over $10,000 than drugs selected in previous years. In IPAY 2028, 10 out of 15 (67%) drugs on the list met this benchmark, compared to 8 out of 15 (53%) drugs on the IPAY 2027 list, and 3 out of 10 (30%) drugs on the IPAY 2026 list.^9,10

Higher-cost drugs selected for negotiation may have a less significant impact on patient out-of-pocket costs than lower-cost drugs due to the patient maximum out-of-pocket (MOOP) in Medicare Part D, which will be $2,400 in 2027.¹¹ Regardless of the discount attributable to the price negotiation process, members taking these medications will still reach their MOOP due to the cost of these drugs.¹² For example, if a drug that costs $50,000 per patient, per year has a negotiated MFP of $10,000, beneficiaries with a 25% coinsurance rate will still pay the same amount annually out of pocket (i.e., the MOOP). A similar situation occurs for Part B drugs where the negotiated prices of higher-cost drugs may have a muted impact on some beneficiaries’ out-of-pocket costs. Medicare Advantage (MA) beneficiaries have an out-of-pocket maximum across all medical services (up to $9,250 for in-network services in 2026),¹³ and the majority of Medicare fee-for-service (FFS) beneficiaries also purchase Medicare Supplement Insurance (Medigap), which covers much of the cost sharing for these members.¹⁴ If the pattern of an increasing number of higher-cost drugs selected remains in future price applicability years, there may continue to be less of a direct impact on beneficiary cost sharing.

Of the manufacturers of drugs selected for negotiation in IPAY 2028, eight out of 14 have drugs that were selected for previous negotiation cycles. These manufacturers will likely be able to leverage learnings from past negotiations when entering negotiations with CMS for 2028, while manufacturers without previously selected drugs will not have this prior experience.

4. Two therapeutic categories are unique to the IPAY 2028 list, and the list includes four competitors within the same therapeutic category.

Two therapeutic categories are new to the price negotiation list in IPAY 2028. These include antiretrovirals (Biktarvy [bictegravir/emtricitabine/tenofovir alafenamide]) and neuromuscular blocking agents (Botox [onabotulinumtoxinA]).

Within the therapeutic categories included in the IPAY 2028 list, there are multiple competitors that will be negotiated in 2028:

• Orencia (abatacept), Cimzia (certolizumab pegol), Cosentyx (secukinumab), and Xeljanz (tofacitinib) which are competitors for certain indications in the immunosuppressant/immunomodulator category.
• Verzenio (abemaciclib) and Kisqali (ribociclib), which are direct competitors in the antineoplastic agent category. Additionally, Ibrance (palbociclib) was selected for IPAY 2027, which means all cyclin-dependent kinase 4 and 6 (CDK4/6) inhibitors for treating estrogen receptor-positive, HER2-negative (ER+/HER2-) breast cancer will be negotiated.

Immunosuppressants/immunomodulators are the most represented therapeutic category (six out of 15 of the drugs) in the IPAY 2028 list. Within this category, four products are competitors within certain therapeutic indications—a first in an IPAY list. The selection of competitor drugs within the same therapeutic category can have implications for manufacturer contracting strategies—both for the drugs selected and for competitors who have not been selected. As drugs are selected for future negotiation cycles, new therapeutic categories may be impacted (with the impact varying based on the therapeutic category and the number of competing products selected). Both selected and nonselected competitors in those categories should understand the impact that selection could have on their contracting strategies.

Conclusion

The drugs selected for IPAY 2028 were influenced by H.R. 1’s expansion of the orphan drug exclusion, which limited the representation of Part B by pushing back the eligibility dates of several higher-spend drugs, and the fact that 25 of the highest spending Part D drugs have already been selected for negotiation in IPAY 2026 and 2027. Compared to earlier cycles, the IPAY 2028 list includes fewer drugs with over $1 billion in Medicare spending, more drugs with a higher annual cost per patient, new therapeutic categories, and larger numbers of competitor drugs within the same therapeutic classes being selected for negotiation.

These dynamics, as well as potential future legislative changes, will continue to shape negotiation cycles, increasing the complexity of assessing eligibility. However, Milliman’s access to the 100% Part D and B Research Identifiable Files and 100% MA encounter data, along with advanced analytic capabilities and in-house clinical, policy, and actuarial expertise, can help mitigate the challenges associated with predicting selected drugs and developing strategies to proactively prepare for a drug’s selection. Beyond assessing negotiation exposure, Milliman can leverage these capabilities to support evaluation of strategic and financial tradeoffs for drugs selected for negotiation or for therapeutic alternatives, inform internal planning and forecasting, and support regulatory engagement with both internal guidance and public-facing analyses. For more information, contact your Milliman consultant.

¹ Centers for Medicare and Medicaid Services. (2026, January 27). CMS announces selection of drugs for third cycle of Medicare Drug Price Negotiation Program, including first-ever Part B drugs. Retrieved February 18, 2026, from https://www.cms.gov/newsroom/press-releases/cms-announces-selection-drugs-third-cycle-medicare-drug-price-negotiation-program-including-first.

² Centers for Medicare and Medicaid Services. (January 2026). Medicare Drug Price Negotiation: Selected drugs for Initial Price Applicability Year 2028. Retrieved February 18, 2026, from https://www.cms.gov/files/document/factsheet-medicare-negotiation-selected-drug-list-ipay-2028.pdf.

³ H.R. 5376—117th Congress (2021-2022). (2022, August 16). An act to provide for reconciliation pursuant to title II of S. Con. Res. 14. Retrieved February 18, 2026, from https://www.congress.gov/bill/117th-congress/house-bill/5376/text.

⁴ H.R. 1—119th Congress (2025-2026). (2025, July 4). An act to provide for reconciliation pursuant to title II of H. Con. Res. 14. Retrieved February 18, 2026, from https://www.congress.gov/bill/119th-congress/house-bill/1.

⁵ Johnson & Johnson. (March 2025). 2024 annual report. Retrieved February 18, 2026, from https://www.jnj.com/download/johnson-johnson-2024-annual-report.

⁶ Bristol Myers Squibb. (2024). 2024 financial report. Retrieved February 18, 2026, from https://www.bms.com/assets/bms-ar/documents/2024/2024-bms-financial-report.pdf .

⁷ Merck. (2025, February 25). 2024 annual report on Form 10-K. Retrieved February 18, 2026, from https://www.merck.com/wp-content/uploads/sites/124/2025/02/0001628280-25-007732.pdf.

⁸ Centers for Medicare and Medicaid Services. (2025, September 30). Medicare Drug Price Negotiation Program: Final guidance, implementation of sections 1191–1198 of the Social Security Act for Initial Price Applicability Year 2028 and manufacturer effectuation of the Maximum Fair Price in 2026, 2027, and 2028. Retrieved February 18, 2026, from https://www.cms.gov/files/document/ipay-2028-final-guidance.pdf.

⁹ Centers for Medicare and Medicaid Services. (2023). Medicare Part D Drug Spending Dashboard. Retrieved February 18, 2026, from https://data.cms.gov/tools/medicare-part-d-drug-spending-dashboard.

¹⁰ Ibid.

¹¹ Centers for Medicare and Medicaid Services. (2026, January 26). 2027 Advance Notice. Retrieved February 18, 2026, from https://www.cms.gov/files/document/2027-advance-notice.pdf.

¹² Doshi, J.A., Li, P., Klebanoff, M.J., & Lin, J.K. (2025). Inflation Reduction Act provisions and Medicare Part D out-of-pocket costs for specialty drugs. JAMA Health Forum, 6(5). Retrieved February 18, 2026, from https://jamanetwork.com/journals/jama-health-forum/fullarticle/2833868.

¹³ Norris, L. (2025, November 17). How are Medicare costs and benefits changing for 2026? Medicare Resources. Retrieved February 18, 2026, from https://www.medicareresources.org/faqs/what-kind-of-medicare-benefit-changes-can-i-expect-this-year.

¹⁴ Ochieng, N., Cubanski, J., & Neuman, T. (2025, December 19). A snapshot of sources of coverage among Medicare beneficiaries. KFF. https://www.kff.org/medicare/a-snapshot-of-sources-of-coverage-among-medicare-beneficiaries.