CMS Drug Price Rule May Target Subcutaneous Keytruda and Opdivo, Hitting Merck and Bristol Myers

What the proposed CMS rule would target

A proposed Centers for Medicare and Medicaid Services rule could extend Medicare drug price negotiation eligibility to subcutaneous formulations of Keytruda and Opdivo. Subcutaneous delivery means the drug is administered as an injection under the skin, as opposed to through an intravenous infusion.

Pharmaceutical companies typically launch subcutaneous formulations of successful intravenous drugs as a strategy to extend the product lifecycle and maintain pricing after the original formulation reaches Medicare negotiation eligibility. If CMS can include these reformulations in the negotiation pool rather than treating them as distinct new products, it closes a significant mechanism that pharma companies use to limit the program's reach.

Why this matters specifically for Merck and Bristol Myers

Keytruda is the world's best-selling cancer drug and Merck's primary revenue driver, generating more than $25 billion in annual sales. Opdivo is Bristol Myers Squibb's leading oncology product. Both drugs are administered primarily intravenously in clinical settings but have subcutaneous formulations that are more convenient for patients and that pharmaceutical companies have been expanding aggressively.

If the CMS rule treats subcutaneous versions as eligible for drug-pricing negotiation, it eliminates the reformulation as a tool for maintaining uncapped Medicare revenue. The financial impact is direct: negotiated prices under the IRA are typically well below market rates, and the subcutaneous versions carry full market pricing today.

Which companies face the biggest impact, and the channel

Merck is the most directly exposed company. Keytruda accounts for more than one-third of Merck's total revenue. A CMS ruling that includes subcutaneous Keytruda in the negotiation pool would significantly expand the proportion of Keytruda sales subject to a Medicare price cap.

Bristol Myers Squibb faces comparable risk through Opdivo. While Opdivo's revenue contribution is somewhat smaller relative to its parent company's total, it remains a flagship oncology product. Expanding the definition of negotiation-eligible drugs to include new formulations of already-negotiated products represents a structural tightening of the regulatory environment.

What to watch

The final rule language is the key variable. Watch for whether CMS adopts a broad definition of a drug's identity that encompasses all formulations, or a narrower interpretation that treats each formulation separately. Industry legal challenges to any ruling that expands the scope of negotiation eligibility would be the natural follow-on.