What: The Centers for Medicare & Medicaid Services (CMS) announced the first round of Maximum Fair Prices (MFPs) for ten commonly-used, costly prescription drugs including Enbrel, Stelara, and Eliquis, as part of the Medicare Drug Price Negotiation Program.

Estimated Net Savings: CMS estimates that if the MFPs would have been in effect last year, Medicare would have saved $6 billion across the ten drugs, suggesting aggregate net savings of 22 percent. 

Opportunities for States: Though MFPs apply to Medicare beneficiaries only, the publication of MFPs presents a potential opportunity for states. Policymakers interested in leveraging the negotiated Medicare drug prices for broader savings will need to consider how they will impact the state’s market weighing existing drug rebates. This model legislation designed to enable referencing MFPs to set upper payment limits could be a tool for interested states. Though the model is designed to work across payers, state employee health plans may also be interested in referencing MFPs individually.  

The Link Between MFPs and PDABs: State Prescription Drug Affordability Boards (PDABs) are considering some of the same costly drugs selected by Medicare for drug price negotiations. The Colorado PDAB conducted affordability reviews on Enbrel and Stelara and determined that they are unaffordable, a first step toward moving forward with the process to establish upper payment limits for those drugs in the state. The Maryland PDAB is currently conducting cost reviews for two additional drugs that were part of the first round of MFP negotiations: Farxiga and Jardiance. MFPs may serve as an important benchmark for PDABs to consider when setting upper payment limits. For example, the Minnesota PDAB statute specifies that when setting an upper payment limit for a drug subject to a Medicare MFP, the board must set the upper payment limit at the MFP.

What’s next: The first round of MFPs goes into effect on January 1, 2026. In the meantime, CMS will identify 15 additional Part D drugs by February 15, 2025, to be subject to the second round of negotiations. Additional Part D and Part B drugs will be negotiated in coming years.