For the first time in Medicare’s 60-year history, the federal government is paying lower, directly negotiated prices for a set of high-cost prescription drugs. The Inflation Reduction Act of 2022 authorized Medicare to negotiate drug prices with pharmaceutical manufacturers, ending a longstanding prohibition that had prevented this practice. The first round of negotiations, covering 10 drugs, produced agreed prices that took effect January 1, 2026 — delivering what CMS and AARP describe as historic savings for Medicare beneficiaries and the federal government.
This article explains exactly how Medicare drug price negotiation works, which drugs have negotiated prices in 2026, what the price reductions mean for out-of-pocket costs, and how the program will expand in coming years. This affects millions of Medicare Part D beneficiaries, particularly those taking the negotiated drugs.
Disclaimer: This article provides educational information about the Medicare drug negotiation program based on official CMS data and published analysis. Individual drug costs depend on your specific Part D plan. Verify coverage and costs for your specific plan at medicare.gov or by contacting your plan directly.
How Medicare Drug Price Negotiation Works
The Negotiation Process
The Inflation Reduction Act directed CMS to negotiate prices for a limited number of high-cost, single-source drugs without generic or biosimilar competition that are used by large numbers of Medicare beneficiaries and account for significant Medicare spending. CMS selects drugs based on total Medicare Part D spending and the absence of competition. Manufacturers can negotiate or pay an excise tax; in practice, all manufacturers whose drugs were selected participated in negotiations for the first round.
The negotiated price — called the Maximum Fair Price (MFP) — applies to Medicare Part D drug plans and Medicare Advantage plans with drug coverage. The MFP represents the maximum Medicare will pay for the drug; Part D plans may negotiate prices below the MFP with manufacturers. For beneficiaries, the MFP determines the basis for cost-sharing calculations.
The First 10 Negotiated Drugs: Prices Effective January 1, 2026
| Drug (Brand Name) | Generic/INN Name | Condition Treated | Price Reduction vs Prior Medicare Price |
|---|---|---|---|
| Eliquis | Apixaban | Blood clots, atrial fibrillation | ~56% reduction |
| Jardiance | Empagliflozin | Type 2 diabetes, heart failure | ~66% reduction |
| Xarelto | Rivaroxaban | Blood clot prevention, CAD/PAD | ~62% reduction |
| Januvia | Sitagliptin | Type 2 diabetes | ~79% reduction |
| Farxiga | Dapagliflozin | Type 2 diabetes, heart failure, CKD | ~68% reduction |
| Entresto | Sacubitril/valsartan | Heart failure | ~53% reduction |
| Enbrel | Etanercept | Rheumatoid arthritis, psoriasis | ~67% reduction |
| Imbruvica | Ibrutinib | B-cell blood cancers (CLL, MCL) | ~38% reduction |
| Stelara | Ustekinumab | Psoriasis, Crohn’s disease, UC | ~66% reduction |
| Fiasp/NovoLog | Insulin aspart | Type 1 and type 2 diabetes | ~76% reduction |
What These Price Reductions Mean for Beneficiaries
The price reductions affect the cost-sharing beneficiaries pay at the pharmacy — but the magnitude of impact depends on how close to the $2,100 out-of-pocket cap they are. For beneficiaries taking a negotiated drug as their primary expensive medication, the lower price may keep them below or close to the OOP cap for the full year, meaning they pay less throughout the year rather than hitting the cap and paying nothing for several months.
According to CMS analysis, over 9 million Medicare beneficiaries who took at least one of the 10 negotiated drugs in 2024 will see direct cost-sharing reductions beginning in 2026. AARP’s February 2026 analysis estimated average savings of $300 to $600 per year for beneficiaries taking Eliquis — the most widely used drug on the negotiation list, taken by approximately 3.8 million Medicare beneficiaries.
The Expansion Timeline: More Drugs to Be Negotiated
The Inflation Reduction Act established a phased expansion of the drug negotiation program. The number of drugs subject to negotiation increases each year:
- 2026 (effective): 10 drugs — first round, negotiated in 2023–2024
- 2027 (effective): 15 additional drugs — negotiated in 2025
- 2028 (effective): 15 additional drugs — negotiated in 2026
- 2029 (effective): 20 additional drugs — negotiated in 2027
- 2030 and beyond: 20 drugs per year
By 2030, approximately 80 Part D drugs will be subject to negotiated prices. The Congressional Budget Office projects the program will save the federal government approximately $160 billion over 10 years — savings that support Medicare’s long-term financial stability.
How to Access Negotiated Drug Prices
Beneficiaries do not need to take any specific action to access the negotiated drug prices — they apply automatically through your Medicare Part D plan when you fill prescriptions for the negotiated drugs at an in-network pharmacy. Your Part D plan’s formulary determines the tier placement and cost-sharing for each drug.
To verify that your current plan covers a negotiated drug and to check the cost-sharing, use the Medicare Plan Finder at medicare.gov/plan-compare or contact your plan directly. If you are not enrolled in a Part D plan, the negotiated prices do not apply — they only apply within the Medicare drug benefit framework.
Frequently Asked Questions
Do the negotiated prices apply to Part B drugs as well?
No. The current negotiation program applies exclusively to Part D drugs — those typically self-administered and dispensed at pharmacies. Part B drugs (administered in physician offices and outpatient settings) are subject to a separate payment mechanism and are not included in the first rounds of the negotiation program.
Will my doctor still be able to prescribe the negotiated drugs?
Yes. Negotiated prices do not affect physician prescribing decisions or patient access to the drugs. The negotiation affects only what Medicare pays the manufacturer — the drugs remain available from pharmacies and covered by Part D plans exactly as before, but at a lower cost basis.
How do I know if my drug is in the second round of negotiations?
CMS published the list of drugs selected for the second round of negotiations in 2025. This list is available on the CMS Medicare Drug Price Negotiation Program page at cms.gov/priorities/innovation/strategic-direction/drug-pricing-reform/medicare-drug-price-negotiation. Beneficiaries currently taking these drugs should expect to see cost reductions beginning in 2027.
Sources
- Centers for Medicare and Medicaid Services — cms.gov — Medicare Drug Price Negotiation Program, Maximum Fair Prices effective January 2026. Available at: https://www.cms.gov/medicare/prescription-drug-coverage/prescription-drug-price-negotiation
- AARP — aarp.org — Medicare drug negotiation analysis and beneficiary savings estimates, February 2026. Available at: https://www.aarp.org/health/medicare-insurance/info-2026/medicare-drug-price-negotiation.html
- Kiplinger — kiplinger.com — Medicare drug negotiation 2026 explained. Available at: https://www.kiplinger.com/retirement/medicare/medicare-drug-price-negotiation
- Congressional Budget Office — cbo.gov — Inflation Reduction Act drug negotiation savings projections. Available at: https://www.cbo.gov/publication/57820
