Year one of the Inflation Reduction Act’s (IRA) Maximum Fair Price (MFP) implementation has produced key evidence on pricing behavior, payer response, and operational readiness, with implications extending well beyond the ten drugs selected in 2026. For manufacturers with MFP-selected products or operating within MFP-impacted drug classes, the patterns emerging from Initial Price Applicability Year (IPAY) 2026 offer a clearer basis for strategic decisions in the years ahead.
The 2026 MFP Cohort: Setting the Baseline
Six of the ten drugs in the inaugural 2026 MFP cohort elected to significantly reduce their wholesale acquisition cost (WAC), bringing WAC substantially closer to the negotiated MFP with discounts ranging from 38% to 79% off 2023 list prices.1 The remaining four maintained WAC pricing, though three of those (Entresto, Stelara, Xarelto) are exiting the program in 2027 following bona fide generic or biosimilar market entry, cutting short their list price decision impact. The pattern suggests that manufacturers anticipating sustained MFP participation may have prioritized operational simplicity and dispensing entity relationship stability over list price maintenance.
The competitive implications extend in both directions: in therapeutic classes where an MFP-selected product now carries a dramatically lower cost, non-selected competitors face a widening price differential that payers and providers will increasingly scrutinize. Conversely, selected manufacturers cannot assume a lower WAC will automatically translate to preferred access and must continue to defend their market position on their product’s full value proposition.
Payer and Provider Dynamics: The Competitive Consequences Are Still Forming
The Dedham Group’s research from late 2025 to early 2026 revealed that more than half of providers surveyed anticipated increased payer utilization management as the primary response to MFP-selected products. Many provider accounts are also carefully evaluating MFP-selected drugs vs. competitors and may seek opportunities to optimize economics within competitive classes.
Meanwhile, payer signals were mixed. Some payer stakeholders surveyed during this same period indicated a willingness to prefer MFP-selected drugs given their lower cost, while others signaled an intent to maintain provider choice, particularly in oncology, where clinical differentiation remains a meaningful counterweight to cost considerations.
“This is a trial year. Next year will have more impact so we are taking a cautious approach.” – Pharmacy Stakeholder, IDN
The Operational Reality: Rebate Reconciliation Complexity
About one-third of surveyed provider accounts cited reimbursement processing as their biggest anticipated challenge regarding IRA MFP implementation, particularly around timing, accuracy, and the administrative burden of reconciling manufacturer rebates through the Medicare Transaction Facilitator (MTF) platform.
Mattingly et al., writing in JAMA Health Forum, identified this tension at the core of the retrospective reconciliation approach. While it allows manufacturers “to delay reconciliation payments until beneficiary eligibility for the MFP is verified,” it can leave pharmacies exposed to payment discrepancies, cash flow uncertainty, and contested claims.2 This impact could fall disproportionately on smaller or independent pharmacies.
“The rebate reconciliation process could be a huge issue for smaller practices. As you add drugs to the MFP list, this issue becomes a bigger and bigger snowball.” – Pharmacy Stakeholder, Community Practice
The Oncology Escalation: IPAY 2027 & 2028 Raise the Stakes
The concentration of oncology drugs in the next two MFP cohorts is not incidental and reflects where Medicare spending has been growing rapidly. Research published in JAMA Network Open revealed that oncology accounted for a stable 0.6-0.7% of Part D beneficiaries throughout the study period, yet absolute oncology drug spending in Part D more than doubled — from $12.8B to $26.2B — between 2016 and 2020, with its share of total Part D spending rising from 9.1% to 13.2% over the same period.3 Oncology’s trajectory as a Medicare cost driver makes it a natural focal point for the MFP program. While only one oncology drug (Imbruvica) was selected for 2026, there are eight oncology drugs entering the program in 2027–2028:
- IPAY 2027: Calquence, Ibrance, Pomalyst, and Xtandi
- IPAY 2028: Erleada, Kisqali, Lenvima, and Verzenio
These selected oncology drugs represent competitive classes where clinical differentiation can be meaningful and multiple agents compete for payer, provider, and pathways positioning. The cost differentials introduced by MFP may reshape net cost recovery calculations, formulary inclusion decisions, and prescribing patterns across entire therapeutic classes, not just for the selected drug.
Manufacturers need to assess which channels and stakeholders are most likely to shift behavior, and what clinical or economic arguments will be most durable in a cost-pressured environment.
Future Outlook
The first year of MFP implementation has produced telling signals on pricing/MFP effectuation behavior, payer response, and account-level dynamics, but those signals look different depending on the therapeutic class, account type, and competitive context. For selected and competing manufacturers alike, the most important investment now is in capturing that variation: how specific payers and providers are responding, where the cost differential is significantly shifting behavior, and what it will take to protect or build position before the program expands in coming years.
References
- CMS. Medicare Drug Price Negotiation Program: Negotiated Prices, Initial Price Applicability Year 2026. Centers for Medicare & Medicaid Services. https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026
- Mattingly TJ II, Esterly AA, Kaltenboeck A. Implementing Maximum Fair Price Without Hurting Pharmacies. JAMA Health Forum. 2024;5(5):e240921. https://doi.org/10.1001/jamahealthforum.2024.0921
- Kyle MA, Dusetzina SB, Keating NL. Evaluation of Trends in Oncology Drug Spending in Medicare, 2016 to 2020. JAMA Netw Open. 2022;5(7):e2221468. https://doi.org/10.1001/jamanetworkopen.2022.21468