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Medicare prescription drug coverage may help you afford the medications you need so you're able to keep more of your hard earned cash. Now, prices for certain medications might be even lower. Under the Inflation Reduction Act, the Medicare program is negotiating prescription drug prices for the first time ever, and that negotiation might save Medicare beneficiaries up to 50% on their prescriptions.
News about these negotiated prices is slow to spread, so here's what you need to know if you have Medicare coverage.
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Why Medicare can negotiate prices
When President Biden signed the Inflation Reduction Act into law in 2022, the Act authorized the government to negotiate the prices of some medications that Medicare covers. Until the Act was signed, Medicare had to use commercial prices and did not have the ability to negotiate on the program's behalf.
Under the Act and its Medicare Drug Price Negotiation Program, the Secretary of the U.S. Department of Health and Human Services can now work with pharmaceutical manufacturers to negotiate the prices that Medicare pays for specific medications. Each year, certain drugs are selected for negotiation, and the number of drugs negotiated annually is scheduled to increase. The first negotiations for 10 medications covered by Medicare Part D began in 2023.
The 10 medications available at lower negotiated prices
The first 10 medications negotiated include Eliquis, Enbrel, Entresto, Farxiga, Fiasp, Imbruvica, Januvia, Jardiance, Stelara, and Xarelto. These medications are all covered by Medicare Part D. All of the medications have been approved or licensed by the FDA for at least seven years. According to the U.S. Department of Health and Human Services, these medications, including blood thinners and diabetes treatments, made up approximately 20% of Medicare's pharmacy medication costs.
The negotiated prices for these first 10 medications went into effect on January 1, 2026.
Additional medications to be negotiated by Medicare
The next round of negotiations will include 15 medications, including Linzess, Austedo, Ibrance, Otezla, and Tradjenta. Those negotiated prices should go into effect on January 1, 2027.
The third round of negotiations also includes 15 medications, like Botox, Cosentyx, Cimzia, Trulicity, and Xolair. Those negotiated prices should go into effect on January 1, 2028.
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How the negotiations might help Medicare enrollees save
Centers for Medicare & Medicaid Services (CMS) estimates that Medicare enrollees will save $1.5 billion on their medications thanks to the first 10 negotiated medication prices that took effect in January 2026. Additionally, CMS estimates that Medicare enrollees may save $685 million when the second round of negotiated medication prices takes effect in January 2027.
Just how much individual Medicare enrollees save depends on factors like which medications they're on, whether they have Medicare Part D coverage, and their plan's deductible. The negotiated prices for the medications vary. Januvia, a Type 2 diabetes medication, might see substantial price drops, and some estimates predict the medication's cost could be reduced by as much as 70%. The cost of Eliquis, which is often used to prevent blood clots and strokes, may drop by about 50% for Medicare enrollees.
What the annual out-of-pocket cap means for Medicare enrollees
The annual out-of-pocket cap might help certain Medicare enrollees save more on medications than the new negotiated prices would. In 2024, enrollees with Medicare Part D prescription plans had to spend at least $8,000 on covered medications before they reached the catastrophic coverage phase, when they would pay no more out-of-pocket costs.
A provision in the Inflation Reduction Act dropped that cap to $2,000 in 2025, helping reduce prescription medication costs for individuals with Medicare Part D. In 2026, that cap increased slightly to $2,100, meaning once Part D enrollees meet their deductible and spend $2,100 in covered medications, they don't have additional out-of-pocket costs for the rest of the year. Any medications they buy for the rest of the year would be $0.
The importance of negotiated medication prices
Affording medication can be stressful, especially for individuals who rely on more expensive medications to manage chronic health conditions. The negotiated prices may give some Medicare enrollees some relief. It may also encourage additional medication adherence, which includes taking the medication as prescribed and not skipping doses. When individuals are better able to afford their medications, medication adherence becomes easier.
Potential downsides to Medicare medication negotiation
The Medicare medication negotiation has potential downsides and has received criticism. The negotiation focuses on medications used frequently to treat chronically ill patients, rather than focusing on particularly high-priced medications. Since the out-of-pocket cap helps enrollees save money on their medications, the drug price negotiation may be seen as an effort to save the Medicare program money, rather than focusing on how to save enrollees money.
The negotiation is also surrounded by legal battles brought against the government by some of the companies whose medication prices are being negotiated. In February 2026, AbbVie Pharmaceuticals filed a lawsuit when its drug, Botox, was added to the list of 2028 medications to be negotiated.
Bottom line
The news of even more medication negotiations is encouraging, but you might find that you save more from the out-of-pocket cost cap. If you're worried about the cost of medications, be sure to review your Medicare coverage to confirm that you've chosen a plan that works well for your needs. Speak with your doctor, too, since you may be able to apply for a manufacturer assistance program to help with the cost.
Check your medication list to see if any of your medications were included in the negotiated list. If so, you might notice a lower price at the pharmacy that might also help lower your financial stress.
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