Does Medicare Negotiate Drug Prices?

Until recently, Medicare wasn’t allowed to negotiate prices for prescription drugs. But the Inflation Reduction Act gives Medicare the power to negotiate certain prescription drug prices^[0]

The negotiated prices include discounts ranging from 38% to 79% off the 2023 list prices of the 10 drugs selected for negotiations, according to the Centers for Medicare & Medicaid Services (CMS)^[0]

As negotiations continue, the government will negotiate prices for more drugs: up to 15 more for 2027, up to another 15 for 2028 and up to 20 more each year after that.

Here’s what you need to know about how Medicare prescription drug price negotiations work.

Qualifying brand-name drugs are chosen for negotiations based on total cost to the Medicare program.

Here are the first ten drugs subject to Medicare price negotiations and their commonly treated conditions, according to the Centers for Medicare & Medicaid Services^[0]

• Eliquis: Prevention and treatment of blood clots.

• Jardiance: Diabetes and heart failure.

• Xarelto: Blood clots and coronary or peripheral artery disease.

• Januvia: Diabetes

• Farxiga: Diabetes, heart failure and chronic kidney disease.

• Entresto: Heart failure.

• Enbrel: Rheumatoid arthritis, psoriasis and psoriatic arthritis.

• Imbruvica: Blood cancers. 

• Stelara: Psoriasis, psoriatic arthritis, Crohn’s disease and ulcerative colitis. 

• Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill: Diabetes.

CMS announced the following discounts from the 2023 list price of the medications will go into effect in 2026 as a result of the price negotiations^[0]

• Januvia: 79%.

• Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill: 76%.

• Farxiga: 68%.

• Enbrel: 67%.

• Jardiance: 66%.

• Stelara: 66%.

• Xarelto: 62%.

• Eliquis: 56%.

• Entresto: 53%.

• Imbruvica: 38%.

What you pay for these medications can vary based on your Medicare Part D coverage. If you pay a set copay for one of these medications, for example, it might stay the same. But if you owe coinsurance (a percentage share of the price) or you're paying out-of-pocket, you’re more likely to pay less in 2026.

CMS will select and publish a list of up to 15 additional Medicare Part D drugs for price negotiations by Feb. 1, 2025. Following negotiations, those drugs’ negotiated prices will be published by Nov. 30, 2025, and go into effect on Jan. 1, 2027^[0]

The act that created Medicare Part D also prohibited Medicare from negotiating lower prescription drug prices.

Medicare Part D plans were first available in 2006, a few years after the program was created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or MMA^[0]

The MMA included a “noninterference” provision, which states that Medicare can’t do any of the following^[0]

• Interfere in prescription drug price negotiations between the insurance companies that offer Medicare prescription drug coverage, drug manufacturers and pharmacies.

• Require that Part D plans cover one specific formulary, or list of covered drugs.

• Set prices for covered Medicare Part D drugs.

Bills to give Medicare the power to negotiate Part D prescription drug prices have been introduced in every session of Congress since the start of Medicare Part D, but none were successful until 2022.

Other Medicare Part D reforms in the Inflation Reduction Act include the following:

• Limits on increases in Medicare Part D premiums and drug prices.

• Expanding eligibility for the Part D low-income subsidy, also known as Medicare Extra Help.

• Caps on out-of-pocket costs like copays, coinsurance and deductibles, starting in 2024.

• Eliminating the Medicare donut hole, or coverage gap, starting in 2025.

» MORE: What the Inflation Reduction Act means for your Medicare coverage