Orphan Drug Negotiation Threshold Doubled to $400 Million, Delaying Medicare Price Checks Until 2028

The “No Big Blockbuster Bailouts Act” is a short but significant piece of legislation focused squarely on the Medicare Drug Price Negotiation Program. Specifically, it changes the rules for “orphan drugs”—those developed to treat rare diseases or conditions. Right now, certain high-revenue drugs are subject to price negotiation with Medicare. This bill modifies that threshold for a specific group of orphan drugs, effectively doubling the revenue ceiling before negotiations kick in. This change applies to initial price applicability years starting on or after January 1, 2028.

The Cost of Curing the Rare

Under the existing framework, if a drug had revenue above a certain level, it could be selected for price negotiation. This bill steps in and changes the math for drugs that have their only approved indication for rare diseases. It swaps the existing $200 million revenue threshold for a new one: $400 million (SEC. 2). What does that mean in real life? Imagine a drug company makes a life-saving medication for a condition affecting only a few thousand people. If that drug brings in $300 million a year, under the old rules, Medicare could start negotiating the price down. Under these new rules, that same drug would be safe from negotiation until its annual revenue hits $400 million.

Who Benefits from the New Ceiling?

This change is a clear win for pharmaceutical companies focused on the rare disease market. Developing orphan drugs is expensive and risky because the patient population is so small. By raising the negotiation threshold, this bill gives manufacturers a longer runway—up to $400 million in annual revenue—to recoup their investment and turn a profit before the government steps in to lower the price. The idea is that this higher ceiling incentivizes continued research and development in areas where drug makers might otherwise hesitate due to limited market size. For patients with rare conditions, this could, theoretically, ensure that the pipeline of new treatments keeps flowing.

The Price Tag for Everyone Else

While this might be good news for drug development, it comes with a potential cost for Medicare beneficiaries and taxpayers. For every orphan drug that earns between $200 million and $400 million annually, Medicare will be paying a higher price for a longer period than it would have under the previous law. This is money that comes from the Medicare program, which is funded by taxpayers and beneficiary premiums. For a senior relying on one of these high-cost, high-revenue orphan treatments, this delay in negotiation means the drug price remains high, potentially affecting their out-of-pocket costs or the overall financial health of the Medicare system. The bill essentially trades short-term price relief for long-term R&D incentive, but that trade-off means higher costs for a specific segment of high-earning drugs for at least the next few years.