Recent Law Expands Orphan Drug Protections, Shielding Blockbusters from Medicare Price Negotiations

A new law, the 'One Big Beautiful Bill Act' (OBBBA), signed in July 2025, broadens protections for orphan drugs, delaying or completely exempting them from Medicare price negotiation3 4 9.

Previously, Medicare could negotiate prices for drugs with at least one common (non-orphan) indication and significant Medicare spending. Now, orphan drugs are exempt from negotiation unless they are approved for a non-rare disease, even if they have multiple orphan indications3 4 9.

This change means blockbuster cancer drugs such as Keytruda and Opdivo—which also treat rare conditions—could be shielded from price negotiations for years, potentially increasing costs for Medicare and beneficiaries1 2 4.

The Congressional Budget Office estimates the expanded exemption could cost Medicare at least $5 billion over a decade, and that figure may rise as additional high-cost drugs are excluded from negotiation1 2.

Critics argue this is a loophole favoring pharmaceutical companies, allowing them to maintain high prices and delaying savings for patients and taxpayers2 4.

The changes go into effect for the 2028 negotiation cycle, with CMS set to announce the expanded list of drugs for potential negotiation by February 20264 5.