Medicare has successfully negotiated price reductions for 10 widely used prescription drugs, with discounts ranging from 38% to 79%. These negotiations are a direct result of the Inflation Reduction Act, signed into law in 2022.
Starting in 2026, Medicare enrollees should see significant reductions in their out-of-pocket costs for these medications. The extent of these savings will depend on individual Medicare Part D coverage. The discounts include a 38% reduction for the blood cancer drug Imbruvica and a 79% cut for the diabetes drug Januvia.
The U.S. Department of Health and Human Services (HHS) estimates that these price reductions will save Medicare enrollees a combined $1.5 billion in 2026. The savings will vary depending on the specific Medicare Part D plans of the enrollees.
The 10 medications were selected for this initial round of price negotiations based on criteria established in the Inflation Reduction Act. Previously, Medicare could not negotiate prices for drugs on a program-wide basis, although individual plans could negotiate prices for specific medications.
List of Drugs and Discounts
The following medications were selected for the first round of negotiations, with the respective discount off the 2023 list price:
- Januvia (diabetes): 79%
- Fiasp/NovoLog (diabetes): 76%
- Farxiga (diabetes, heart failure, chronic kidney disease): 68%
- Jardiance (diabetes, heart failure, chronic kidney disease): 66%
- Stelara (psoriasis, Crohn’s disease, ulcerative colitis): 66%
- Xarelto (prevention and treatment of blood clots, coronary or peripheral artery disease): 62%
- Eliquis (prevention and treatment of blood clots): 56%
- Entresto (heart failure): 53%
- Imbruvica (blood cancers): 38%
- These medications cover a range of conditions that primarily affect the Medicare population.
Impact on Medicare Enrollees
Many Medicare enrollees are expected to see out-of-pocket savings on these drugs, but the actual savings will depend on individual Medicare Part D plans. For instance, an enrollee taking Stelara who currently pays a 25% coinsurance might see their monthly cost drop from $3,400 to $1,100 after the negotiated prices take effect.
While the price reductions are promising, some experts caution that other factors within the healthcare system could influence the final cost to patients. Insurers might adjust cost-sharing requirements, or add administrative hurdles, such as requiring prior authorization before prescribing these medications.
Future Price Negotiations
In early 2025, the U.S. Centers for Medicare & Medicaid Services (CMS) will select up to 15 additional drugs for price negotiation, with the reduced prices going into effect in 2027. This will be followed by price negotiations for up to 20 more Part B or Part D drugs each subsequent year.
Unintended Consequences
There are concerns that the negotiated price cuts might lead to unintended consequences, such as insurers increasing out-of-pocket costs for enrollees or imposing restrictions on access to these drugs. It’s crucial to monitor these developments to ensure that the intended benefits of these price cuts reach Medicare enrollees.
Other Ways to Save
In addition to these negotiated price reductions, Medicare enrollees can benefit from other provisions of the Inflation Reduction Act. These include a $35 monthly cap on insulin costs, the removal of cost-sharing for vaccines under Part D plans, and a $2,000 annual out-of-pocket cap on prescription drug spending, which takes effect next year.
Takeaway
Medicare’s negotiated price reductions on 10 common prescription drugs are set to take effect in January 2026, potentially lowering out-of-pocket costs for millions of enrollees. However, the actual savings will depend on various factors, including how Medicare Part D plans implement these changes.
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