Does Medicare Negotiate Drug Prices?

Medicare drug price negotiations are underway, and the first negotiated prices will take effect in 2026.
Alex Rosenberg
By Alex Rosenberg 
Updated
Edited by Holly Carey

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Until recently, Medicare wasn’t allowed to negotiate prices for prescription drugs, but the Inflation Reduction Act makes big changes to Medicare Part D. The new law, which passed in August 2022, allows Medicare to start negotiating prescription drug prices — and the negotiations are underway.

Here’s what you need to know about how Medicare prescription drug price negotiations work now and what’s changing over the next few years.

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Can Medicare negotiate prescription drug prices?

The Inflation Reduction Act gives Medicare the power to negotiate certain prescription drug prices for the first time

117th Congress. House Bill 5376. Accessed Feb 16, 2024.
.

Negotiations for the first set of 10 drugs are underway. The negotiated prices will be published Sept. 1, 2024, and the prices will go into effect on Jan. 1, 2026

.

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 for each year after that.

What drugs are subject to Medicare price negotiation for 2026?

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

:

  • 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.

Why couldn't Medicare negotiate drug prices?

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

108th Congress. House Bill 1. Accessed Feb 16, 2024.
.

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

Congressional Research Service. Medicare Part D Prescription Drug Benefit. Accessed Feb 16, 2024.
:

  • 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.

What other changes were made to Medicare Part D?

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

If you have additional questions about Medicare, visit Medicare.gov or call 800-MEDICARE (800-633-4227, TTY 877-486-2048).

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