New prices will go into effect on January 1, 2026, for individuals covered by Medicare Part D prescription drugs.
In a highly anticipated announcement stemming from the genesis of the Inflation Reduction Act (IRA) of 2022, the Biden-Harris Administration reached an agreement to offer Medicare-covered individuals discounts for the first 10 drugs selected for negotiation. These patients will now yield estimated out-of-pocket savings nearing $1.5 billion, according to a Centers for Medicare and Medicaid Services (CMS) news release.1
“In August 2022, President Biden signed the Inflation Reduction Act of 2022 (P.L. 117-169) into law. The law makes improvements to Medicare by expanding benefits, lowering drug costs, and improving the sustainability of the Medicare program for generations to come. The law provides meaningful financial relief for millions of people with Medicare by improving access to affordable treatments and strengthening Medicare, both now and in the long run,” wrote CMS.2
In a move to combat inflating drug prices, the IRA’s focus was on drugs of high expenditures that are single sourced without generic or biosimilar competition. CMS selected the first 10 drugs and entered them into the IRA’s negotiating process, which consisted of ongoing deliberation between CMS and drug manufacturers to come to final agreements on each of the 10 drugs. The bulk of this process was conducted at the beginning of 2024, resulting in the final agreement that was recently announced to go into effect at the beginning of 2026.
The IRA’s focus was on drugs of high expenditures that are single sourced without generic or biosimilar competition. | image credit: wladimir1804 / stock.adobe.com
If these negotiations went into effect in 2023, Medicare expenditures would have decreased by $6 billion (22%) among the 10 selected drugs alone. Because of these negotiations, Medicare-covered patients will take advantage of discounts ranging from 38% to 79% compared with the drugs’ original list prices. Finally, speaking to the number of patients who will be reaping these benefits come 2026, almost 9 million people covered by Medicare use at least 1 of the 10 selected drugs.
“CMS is proud to have negotiated drug prices for people with Medicare for the first time. These negotiations will not only lower the prices of critically important medications for cancer, diabetes, heart failure, and more, but will also save billions of dollars,” said CMS Administrator Chiquita Brooks-LaSure.1 “Medicare drug price negotiation and the lower prices announced today demonstrate the commitment of CMS and the Biden-Harris Administration to lower health care and prescription drug costs for Americans. We made a promise to the American people, and today, we are thrilled to share that we have fulfilled that promise.”
The brand names of the 10 drugs included under IRA price negotiations are as follows: Januvia; multiple Novo Nordisk variations to treat diabetes, including Fiasp; Farxiga; Enbrel; Jardiance; Stelara; Xarelto; Eliquis; Entresto; and Imbruvica. The largest discount among all 10 drugs is 79%, lowering the list price for a 30-day supply of Januvia in 2023 from $527 to $113. The most expensive drug covered, also the drug with the smallest discount at 38%, is Imbruvica for the treatment of blood cancers. Imbruvica’s list price for a 30-day supply in 2023 was just under $15,000 and will now be offered at $9,319 for Medicare-covered patients in 2026.
Some of the other drugs included were approved to treat various conditions including diabetes, cardiovascular diseases, kidney disease, arthritis, psoriasis, Crohn’s disease, ulcerative colitis, blood clots, and more.
“Americans pay too much for their prescription drugs. That makes today’s announcement historic. For the first time ever, Medicare negotiated directly with drug companies and the American people are better off for it,” said U.S. Department of Health and Human Services Secretary Xavier Becerra.1
Indeed, it is no secret that prescription drug expenditures are rising rapidly across the US. With inflation rising at a similar pace and recent FDA approvals for weight-loss drugs, overall prescription drug expenditures are in desperate need of some relief.
“Blockbuster growth in weight-loss drugs was the main driver of a 13.5% increase in spending on prescription medications in the U.S. in 2023,” according to an American Society of Health-System Pharmacists news release.3 “Spending on weight-loss drugs—originally marketed as diabetes treatments—will likely continue to climb as supplies catch up with the huge demand. The trend will escalate further as additional similar drugs come to market and as the FDA approves the medications for more conditions.”
Price negotiations being enacted in 2026 is just the first step in the IRA’s detailed plan to bring out-of-pocket savings to millions of Americans that are covered by Medicare. Fifteen more drugs will be selected by February 2025 for discounts that will be enacted in 2027. Fifteen more drugs covered by Medicare Part B or Part D will be negotiated for the year 2028, and up to 20 more drugs will be selected the year after.
Finally, aside from the 10 selected drugs starting in 2026 and those to be selected for succeeding years, Medicare-covered individuals will experience a $2000 out-of-pocket cap on all prescription drugs covered by Part D starting in 2025.
“CMS negotiated in good faith on behalf of the millions of people who rely on these 10 drugs for their health and well-being. The new negotiated prices will bring much needed financial relief, affordability, and access. Throughout the process, we remained true to our commitment to be thoughtful and transparent, meeting publicly with patients, providers, health plans, pharmacies, drug companies, and others to help inform the process. We will continue to do so for future cycles,” concluded Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare.1
READ MORE: Video: The Inflation Reduction Act in 2024 and Beyond
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