The final guidance for the third cycle of the Medicare Drug Price Negotiation Program (initial price applicability year, or IPAY 2028) drew attention for extending negotiation to Part B drugs. A quieter issue may matter more, and not only for this cycle. When the Centers for Medicare and Medicaid Services (CMS) sets the starting point for its initial offers for IPAY 2028, the negotiation teams may now consider the maximum fair price (MFP) of a therapeutic alternative that was selected for negotiation in an earlier cycle. Already-negotiated prices have become de facto inputs to new negotiations. This has important implications for every drug still to be negotiated.
A previously negotiated MFP is an administered price, fixed thereafter except for inflation, that already embeds CMS’s earlier judgments about which drugs are comparable and what is an appropriate price. Letting prior MFPs set the starting point for a new negotiation carries that judgment forward without retesting it against current market conditions or recent evidence of clinical or economic value. We argue that paying value-based prices is important because it helps ensure that manufacturers produce more of what people want—products that improve people’s health—while considering society’s other pressing priorities. Prior MFPs can provide informative evidence in a negotiation, but they are poor candidates to anchor the negotiation.