Medicare Drug Price Negotiation Cuts Costs for 10 Drugs in 2026

The first negotiated prices are now in effect

This year Medicare began paying prices it negotiated directly with drugmakers, something the program had never done before. Since January 1, 2026, Part D has paid negotiated rates for ten brand-name drugs. Those prices came out of the first negotiation cycle created by the Inflation Reduction Act, and the drugs on the list had no generic or biosimilar competition1. The list is Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and the insulins Fiasp and NovoLog2. Together they treat diabetes, blood clots, heart failure, autoimmune disease and blood cancers3.

The discounts are large on paper. Federal analysts put the negotiated prices 38% to 79% below 2023 list prices, with Imbruvica at the low end of that range and Januvia at the high end7. The same analysis found that list prices for all but one of the ten drugs had gone up every year from 2018 through 20237.

The policy question for 2026 is whether those discounts reach patients. A second question matters just as much: is the gain for seniors being swamped by cost pressure elsewhere, especially in Medicaid and hospital finances?

How big are the savings? It depends who is counting

Accounts agree on the outline of the savings but use different numbers. CMS projects that Part D enrollees will save about $1.5 billion out of pocket in 2026 under the standard benefit design, on top of the IRA's annual cap on drug spending1. On the program side, CMS estimated that the new prices would have cut net covered drug costs by about $6 billion, or roughly 22%, if they had applied in 20235. A law-firm analysis cites a projected $6.4 billion cut in net Medicare spending on these drugs in 20268.

Those figures are not the same thing. One independent tracker treats the $6 billion as actual first-year savings and says the ten drugs once made up about 20% of Part D spending4. CMS described the $6 billion as a counterfactual based on 2023 claims5. Readers should read the $6 billion figure as a well-grounded projection, not a measured result. Even the tracker calls the first-year savings modest next to total Medicare drug spending of more than $200 billion a year4.

Some consumer-facing coverage has also garbled the benefit rules. One guide says the Part D out-of-pocket cap is $2,000 in 2026. Other reporting says the cap began at $2,000 in 2025 and rose to $2,100 this year2223.

What patients are actually seeing

The most useful patient-level evidence comes from analyses of plan design. AARP's Public Policy Institute studied 56 stand-alone Part D plans in California, Florida, New York, Pennsylvania and Texas23. It found that enrollee cost-sharing for the ten drugs fell by about half between 2025 and 202623. In those plans, seven of the ten drugs now average under $100 a month out of pocket, compared with two in 2025. Nearly 9 million Part D enrollees take at least one of the drugs9.

The mechanism explains why the savings are uneven. AARP's researchers tie the drop to plans' growing use of coinsurance, which is a percentage of the drug's price, so a lower price directly lowers what the patient pays. A formulary analysis from DLA Piper found the same pattern from the other direction. Savings go mainly to people who take a selected drug, are in a plan that charges coinsurance rather than a flat copay, and do not get Extra Help, the low-income subsidy8. Specialty drugs on tier 4 or higher carried coinsurance in every formulary studied8. Flat copays on the non-specialty drugs fell only $1 to $3 over the study period8.

GoodRx makes a related point. For many enrollees, the out-of-pocket cap may do more than the negotiated price22. Someone who already hits the cap each year may see no change in their annual total when one drug gets cheaper24. Insulin already had its own monthly cost cap before negotiation24.

The likely result: patients on expensive coinsurance-based drugs below the cap see real savings, while those on flat copays or already at the cap see little change.

One clear gain is access. Plans must now cover every selected drug, and the DLA Piper review found all ten on 100% of 2026 formularies8. Before the IRA, in 2021, eight of the ten were on at least 98% of formularies8.

The Medicare Advantage angle

People in Medicare Advantage plans get the negotiated prices through their plan's drug coverage, just as people in stand-alone Part D plans do24. The prices also apply in Medicare Advantage drug plans and employer group waiver plans7. Every Medicare Advantage plan with drug coverage must list the ten drugs on its formulary25.

For Medicare Advantage members, premiums matter as much as prices. In 2026, the average monthly premium is about $11.50 for Medicare Advantage drug plans and about $34.50 for stand-alone Part D plans23. A temporary CMS premium stabilization demonstration has limited stand-alone premium increases while the reforms take hold23. CMS said in July that this support ends in 202723. It also raised the 2027 base beneficiary premium to $41.33, up from $38.9923.

The timing is awkward. Medicare open enrollment began October 152. Shoppers are seeing larger price discounts arrive for 2027 at the same moment premium support is going away. On balance, the 2027 enrollment season looks like a choice between a lower drug bill and a higher premium, and plan comparison matters more than usual.

The IRA's benefit redesign also moves costs onto the program. One forecast puts Medicare's 2026 medical cost trend at 9.2%, partly because drug spending is shifting from beneficiaries to Medicare19. Earlier research found that the Part D redesign, including the cap, would have raised Medicare spending by about $30 billion without negotiation21. Negotiation savings offset that increase21. Seen this way, negotiation is less a windfall than the funding source for the cap.

Medicaid cuts move costs in the other direction

The benefit is not reaching everyone. NBC News described 2026 as a split year14. Medicare enrollees got their first negotiated prices, while people relying on Medicaid and Affordable Care Act coverage faced funding cuts and expiring premium subsidies14. KFF estimated that some ACA enrollees could pay up to 114% more in premiums once the subsidy loss and insurer rate increases are combined14.

The Medicaid cuts in last year's H.R. 1 total almost $1 trillion, and the Congressional Budget Office expects about 10 million people to lose coverage15. STAT reported that cuts aimed at supplemental Medicaid payments, which have increasingly kept hospitals afloat, are expected to be larger than first forecast17. Separately, federal Medicaid disproportionate share hospital (DSH) payments, which go to hospitals serving many low-income and uninsured patients, have been cut by about $8 billion a year since fiscal 2026 began16.

The Medicare Rights Center warns of further effects. States absorbing the lost federal money may cut optional coverage, home- and community-based services and provider payments12. Many older and disabled Americans rely on those services12.

Hospitals, and the patients who pay for them

The link between these cuts and hospital bills is well documented. A Commonwealth Fund model looked at what happens if states drop the Medicaid expansion13. It projected a 19% average decline in hospital operating margins in expansion states, and a 56% decline for safety-net hospitals13. Uncompensated care, meaning treatment hospitals provide but are never paid for, would rise by $14.3 billion13. The Urban Institute put provider revenue losses at $80 billion in a similar scenario, with hospitals losing $31.9 billion20.

These are worst-case scenarios that assume every state drops its expansion, not forecasts. The direction they point is consistent, though. A recent opinion analysis argues that hospitals under pressure first cut less profitable services, push costs onto private payers, or turn to private equity, well before they close15. It also noted that about 700 rural hospitals were already at risk of closure15. Employers expect health costs to rise about 8.2% next year, and that analysis names the Medicaid cuts as one cause15. Other forecasts put commercial cost growth near 9%19.

The bottom line

The negotiation program is doing what it was built to do. It has cut prices on ten high-spend drugs, guaranteed formulary coverage, and roughly halved cost-sharing for many enrollees who pay coinsurance823. More is scheduled. Fifteen more drugs, including Ozempic and Wegovy, get negotiated prices in January 20272. In January 2026, CMS chose 15 more for 2028, including the first physician-administered Part B drugs3. The program has limits as well. Three of this year's drugs will lose their negotiated price in 2027 because generic or biosimilar competition arrives8.

Negotiation is a real but targeted saving for seniors, and it is offset by higher premiums inside Medicare and by Medicaid cuts outside it. The roughly $1.5 billion in projected out-of-pocket relief1 is small next to the hospital and coverage losses projected from the Medicaid cuts1320. Overall health care costs in 2026 are being set less by the ten negotiated drugs than by who loses coverage and who ends up paying for their care.