What Maximum Fair Prices Mean for Formulary Decision-Making

At the Academy of Managed Care Pharmacy Nexus 2026 meeting, panelists participating in the session "Beyond Price Negotiation: Has Maximum Fair Price (MFP) Reshaped Formulary Dynamics?" spoke with The American Journal of Managed Care^® about how negotiated Medicare drug prices are changing formulary decisions.

Under the Inflation Reduction Act's Medicare Drug Price Negotiation Program, MFPs took effect on January 1, 2026, for 10 Medicare Part D drugs, with reductions ranging from 38% to 79% off 2023 list prices.^1,2 A CMS proposed rule would permanently require Part D plans to include any drug with an MFP in effect on their formularies.³ Negotiated prices for a second cycle of 15 drugs will take effect in 2027, while the 2028 negotiation cycle will include Medicare Part B drugs.^4,5

At the meeting, Hiva Pourarsalan, PharmD, of Aetna said the fundamentals of formulary evaluation remain unchanged after MFPs went into effect, as plans still aim to offer the most effective and affordable therapies. The key difference is that coverage of MFP drugs is required by law, so coverage decisions for those products are effectively predetermined.

Johnathan Toft, PharmD, MBA, of Lumanity said the effects also vary by line of business. In Part D, plans have covered the required drugs while also cutting coverage of similar competing products in the same “market basket.” That shift has been most pronounced among stand-alone prescription drug plans, though Medicare Advantage Prescription Drug plans have also seen it, he noted. Although there has been little spillover into commercial formularies so far, Toft said he expects that to change.

How therapeutic alternatives to these MFP drugs are handled varies from class to class, Pourarsalan cautioned. Still, because coverage of certain drugs is required regardless of formulary considerations, plans have to be more creative with the rest while keeping effective therapies available to members.

Lisa Cashman, PharmD, of Lumanity added that incentives have shifted toward lower net-price products. She echoed Pourarsalan’s earlier point that CMS requires plan sponsors to cover all MFP drugs, adding that sponsors are also prohibited from discriminating against those drugs in favor of alternatives that were not selected for negotiation.

Looking ahead, Toft said future changes will depend on the level of competition within each market basket.

“We see with more and more products for a given disease state, oftentimes there’s a lot of pressure from the payer perspective to control costs,” he concluded. “They’ll be playing those drugs off one another, really looking for the lowest net cost available, especially in the absence of head-to-head trials, which is often the case.”

References

1. Mattina C. CMS releases list of 10 drugs subject to price negotiation under IRA. AJMC^®. August 29, 2023. Accessed November 3, 2026. https://www.ajmc.com/view/cms-releases-list-of-10-drugs-subject-to-price-negotiation-under-ira
2. McCormick B. Medicare drug price negotiations yield uneven out-of-pocket savings. AJMC. October 12, 2026. Accessed November 3, 2026. https://www.ajmc.com/view/medicare-drug-price-negotiations-yield-uneven-out-of-pocket-savings
3. Joszt L. CMS proposes permanent rules for Medicare drug price negotiation. AJMC. June 15, 2026. Accessed November 3, 2026. https://www.ajmc.com/view/cms-proposes-permanent-rules-for-medicare-drug-price-negotiation
4. Steinzor P. Trump signs executive order to lower drug prices. AJMC. April 16, 2025. Accessed November 3, 2026. https://www.ajmc.com/view/trump-signs-executive-order-to-lower-drug-prices
5. Bonavitacola J. Next round of Medicare drug price negotiations to include semaglutide. AJMC. January 17, 2025. Accessed November 3, 2026. https://www.ajmc.com/view/next-round-of-medicare-drug-price-negotiations-to-include-semaglutide