CMS announces billions in savings for Medicare when first and second rounds of negotiations go into effect in 2026 and 2027, respectively.
The Centers for Medicare and Medicaid Services has announced the expected savings from a second round of Medicare drug price negotiations.
There is a net savings of 44%, or $12 billion, from negotiated Medicare spending on the 15 drugs included in the second round of price negotiations.
The Maximum Fair Prices (MFPs) for these 15 drugs will become effective Jan. 1, 2027. These drugs are used to treat diabetes, cancer, asthma, heart disease, respiratory illnesses, autoimmune conditions and other chronic illnesses, which represent some of the highest Medicare Part D spending, CMS said.
Included in this second round are Ozempic, Rybelsus and Wegovy, which are used to treat diabetes and are also in demand for their weight loss benefits.
Other drugs in the second cycle of negotiations, which were announced in January, are Trelegy Ellipta, Xtandi, Pomalyst, Ibrance, Ofev, Linzess, Calquence, Austedo, Austedo XR, Breo Ellipta, Tradjenta, Xifaxan, Vraylar, Janumet, Janumet XR and Otezla.
When the negotiated prices go into effect in 2027, people enrolled in Medicare prescription drug coverage are expected to save an estimated $685 million in out-of-pocket costs.
WHY THIS MATTERS
In 2024, about 5.3 million patients on Medicare used one of the 15 drugs included in this second round, accounting for $42.5 billion in Medicare Part D spending.
The negotiated prices generate billions in savings for Medicare.
This round of negotiations brings the total number of negotiated drugs to 25 when combined with the 10 previously negotiated drug prices taking effect Jan. 1, 2026, CMS said.
THE LARGER TREND
Last year, the first 10 drugs selected for Medicare price negotiation were Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Fiasp/NovoLog.
The Medicare Drug Price Negotiation Program was established through the 2022 Prescription Drug law, which allowed the federal government to negotiate directly with drug manufacturers for lower prices on the most expensive medications covered under Medicare.
ON THE RECORD
AARP CEO Dr. Myechia Minter-Jordan said, “Older Americans across the political spectrum consistently say lower drug prices are a top priority, and these negotiated prices will bring meaningful relief to millions of people on Medicare. Our members are eager to see the first round of lower prescription drug prices take effect on Jan. 1, 2026, and we thank the administration for ensuring Medicare’s ability to negotiate lower drug prices is protected so older Americans benefit for decades to come.”
Merith Basey, executive director of Patients For Affordable Drugs, said, “The Medicare Negotiation Program changed the trajectory of drug pricing in the United States, helping to reduce Big Pharma’s monopoly pricing power, which dictated prices to Americans on Medicare for two decades.”
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