Medicare has negotiated drug prices for the first time to save seniors $1.5 billion in out-of-pocket costs

The new prices will take effect on January 1, 2026. Last year, the taxpayer-funded Medicare program would have saved $6 billion, according to the Department of Health and Human Services. Medicare Part D recipients would have had to pay $1.5 billion less out of pocket for their drugs.

Medicare Part D covers prescription drugs for people age 65 and older and people with certain disabilities, including people with Social Security Disability.

“Americans are paying too much for their prescription drugs,” said Health and Human Services Secretary Xavier Becerra. “For the first time ever, Medicare has negotiated directly with drug companies, and that is good for the American people. … Giving Medicare the ability to negotiate prices not only strengthens the program for future generations, but also puts a stop to skyrocketing drug prices.”

For example, Pharmacyclics, the maker of Imbruvica to treat blood cancer, has agreed to a 38% price cut for a 30-day supply from $14,934 in 2023 to $9,319 in 2026. Jardiance Boehringer, the company that makes Ingelheim – a drug commonly used to treat diabetes, heart failure and chronic kidney disease – will cut the price of a 30-day supply by 66% to $4,695 in 2026. In 2023, the price was $13,836.

But it's difficult to say how much the reduced prices will affect the average Medicare beneficiary, Politico reported. That's because Part D already covers most of the costs of prescription drugs that seniors take at home. The newly negotiated prices are list prices. They're used when drug companies negotiate discounts with middlemen who represent the private insurers that administer Part D. These discounts, kept confidential, lower list prices. And the maximum amounts for copayments and deductibles also affect prices for Part D beneficiaries.

The New York Times reported that only a portion of seniors who take these drugs might benefit from a cost reduction — namely, those whose insurance requires them to pay a percentage of the drug cost out of pocket before discounts. But even in those cases, it may do little to help seniors who reach the $2,000 cap on annual drug costs.

Democrats had pushed for years to give the federal government the ability to negotiate prices with drug companies, as private insurers do. President Joe Biden signed a law in 2022 giving Medicare the ability to negotiate prices of certain expensive drugs for which there are no generics or “biosimilars” – drugs that are nearly the same as, but not identical to, the original drugs.

The Centers for Medicare & Medicaid Services has selected ten drugs for the first round of negotiations, with price changes to take effect in 2026. These drugs, their uses, and their newly negotiated list prices are listed in the table below.