Medicare Drug Price Negotiation: What You Need to Know
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Starting in 2026, Medicare enrollees may pay less for some common prescription drugs. That's because the government has begun to negotiate prices for the most popular drugs available to those on Medicare.
Historically, Medicare has not been allowed to negotiate directly with drug companies. This changed in 2022 with the passing of the Inflation Reduction Act.
Medicare drug prices list
Negotiations have finished for the first batch of drugs. New prices will go into effect at the start of 2026.
These 10 drugs include the popular blood thinner Eliquis, which is used by roughly 7% of Medicare enrollees with Part D (prescription drug) coverage, and Januvia, a drug that helps those with type 2 diabetes manage their blood sugar levels.
The drop in prices from Medicare negotiations is often significant. Prices for most drugs will go down by roughly half to two-thirds of their 2023 list prices. The average cost of Fiasp and Novolog, a type of rapid-acting insulin, will fall by about three-quarters.
What are the 10 drugs negotiated by Medicare for 2026?
Drug | 2023 List Price | 2026 MFP | % Price Cut |
|---|---|---|---|
| Eliquis | $521 | $231 | 56% |
| Enbrel | $7,106 | $2,355 | 67% |
| Entresto | $628 | $295 | 53% |
| Farxiga | $556 | $179 | 68% |
| Fiasp/Novolog | $495 | $119 | 76% |
| Imbruvica | $14,934 | $9,319 | 38% |
| Januvia | $527 | $113 | 79% |
| Jardiance | $573 | $197 | 66% |
| Stelara | $13,836 | $4,695 | 66% |
| Xarelto | $517 | $197 | 62% |
Remember, you don't pay the list price for prescription drugs if you have a Medicare Part D plan or a Medicare Advantage plan with drug coverage. Instead, you'll typically pay a percent of the drug's cost, called coinsurance.
So, if you have to pay 20% coinsurance for Stelara, you would go from paying $2,767 per injection to $939 per injection. That's a savings of $1,828 per injection.
The Centers for Medicare and Medicaid (CMS) has announced the next group of 15 drugs. Negotiations are underway and new prices for these drugs will go into effect in 2027.
What 15 drugs are being negotiated by Medicare for 2027?
- Ozempic, Rybelsus, Wegovy
- Trelegy Ellipta
- Xtandi
- Pomalyst
- Ibrance
- Ofev
- Linzess
- Calquence
- Austedo / Austedo XR
- Breo Ellipta
- Tradjenta
- Xifaxan
- Vraylar
- Janumet / Janumet XR
- Otezla
Starting in 2025, you won't pay more than $2,000 per year for drugs through Medicare Part D. Previously, Part D plans didn't cap the amount you could pay in a single year, called an out of pocket maximum.
Medicare drug price negotiation timeline
The Centers for Medicare and Medicaid (CMS) got the authority to negotiate drug prices in 2022 with the passing of the Inflation Reduction Act. The first group of drugs chosen for negotiation will have their prices lowered at the beginning of 2026.
Although it took four years for the first set of new drug prices to start, later groups of drugs will see price drops on a two-year cycle. So, those drugs chosen for negotiation in 2025 will have lower prices by early 2027.
Medicare will continue to negotiate drug prices on a two-year cycle beyond 2028. Currently, there's no end date for this process.
How does Medicare drug price negotiation work?
Medicare chooses drugs for price negotiations based on their cost, popularity and options for low-cost alternatives.
- After identifying the drugs for negotiation, CMS contacts the drug maker and asks for information about the drug. This includes costs related to drug manufacturing, research, development, sales and marketing. Companies also have to reveal any government funding that went into the drug's creation.
- After reviewing the data, CMS decides on a maximum price the company can sell the drug for.
- The company can then request a higher price for the drug. During this period, the drug manufacturer might have several meetings with CMS during which they can present data and make arguments.
- After six to nine months of negotiations, CMS decides on a final price.
- The company charges the negotiated price at the start of the chosen year.
If a company decides to charge a higher price than what CMS has set, the company may have to pay a large tax. In some cases, CMS may decide not to do business with the drug manufacturer at all.
That means the company can no longer sell drugs to any of the 66 million Americans on Medicare.
Other ways to save on prescription drugs
Medicare enrollees won't see Part D cost savings until early 2026. If you'd like to lower the amount you pay for prescription drugs before then:
- Shop around for the best Medicare Part D plan that fits your needs. Check the list of covered drugs for the plans in your area before you buy. You'll find important information like the amount you'll have to pay for a specific drug when you go to the pharmacy, called a copay or coinsurance.
- Use an online pharmacy to find cheaper prices. Online pharmacies such as Amazon Pharmacy, Birdi and BlinkRx often offer cheaper prices than traditional brick-and-mortar stores. Plus, you get the convenience of having your prescriptions shipped straight to your front door.
- Take advantage of prescription coupons from companies like GoodRx. Just keep in mind that you might not be able to pair your insurance with a coupon, so you'll have to check and see which makes the most sense for you.
- Enroll in your pharmacy’s discount program if they offer one.
Frequently asked questions
What drugs is Medicare negotiating prices for?
Medicare is currently negotiating the prices for Ozempic, Rybelsus, Wegovy, Trelegy Ellipta, Xtandi, Pomalyst, Ibrance, Ofev, Linzess, Calquence, Austedo, Austedo XR, Breo Ellipta, Tradjenta, Xifaxan, Vraylar, Janumet, Janumet XR and Otezla. The new prices for these drugs will start at the beginning of 2027.
Why can't Medicare negotiate drug prices?
Between 2003 and 2022, Medicare wasn't allowed to negotiate drug prices by law. Some members of Congress believed that letting Medicare negotiate with drug companies could lead to less competition and fewer new drugs. Lobbying by the prescription drug industry may also have contributed to this law.
Is it legal for Medicare to negotiate drug prices?
Yes, Medicare legally can negotiate prices for a limited number of drugs each year. The Inflation Reduction Act in 2022 is responsible for this change.
Methodology
Medicare Part D price negotiation rules came from the Centers for Medicare and Medicaid (CMS). Other information is from the Kaiser Family Foundation (KFF) and Medicare.gov.
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