The Mechanism
Washington does not usually get to tell a company what its product is worth. The Inflation Reduction Act changed that. Starting January 1, 2026, the Centers for Medicare & Medicaid Services imposed Maximum Fair Prices (MFPs) on the first ten high-spend Medicare Part D drugs after years of negotiation — discounts ranging from 38% to 79% off 2023 list prices. The program expands by 15 drugs in 2027, 15 more in 2028, and 20 per year thereafter. The selection criteria are blunt: once a small-molecule drug has been FDA-approved for seven years (biologics get eleven), it becomes eligible. The more Medicare spends on it, the closer it is to the top of the list. The mechanism is simple and durable — every year Washington runs the program, more revenue gets repriced.