Medicare Drug Prices: First 10 Negotiated Discounts Hit Year One

From a list to lower prices

When federal regulators named the first 10 prescription drugs that would be subject to Medicare price negotiation in August 2023, the program was still largely untested. Nearly three years later, it is part of how Medicare pays for drugs. On August 29, 2023, the Centers for Medicare & Medicaid Services (CMS) published the first-round list: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and the NovoLog/Fiasp insulins.2 Every manufacturer of those drugs agreed to negotiate by October 2023. Several of them also sued the government, arguing that the negotiation provisions were unconstitutional.10

The negotiated prices, which the law calls "maximum fair prices," took effect for Medicare Part D on January 1, 2026.13 As open enrollment for 2027 coverage begins on October 15, the first round has been running for more than eight months. A second round of 15 drugs, including Ozempic and Wegovy, starts in January, and a third round is in its final weeks of talks.412

The program now has a track record, so the useful question is no longer whether Medicare can negotiate. It is how much the negotiated prices change what patients and taxpayers actually pay. On that point, the reporting is less in agreement than the headline numbers suggest.

What the first round delivered

The discounts off list price are large. A federal analysis by the Department of Health and Human Services' planning office (ASPE) compared the negotiated prices with 2023 list prices. The cuts ranged from 79% for Merck's diabetes drug Januvia to 38% for the blood-cancer drug Imbruvica.2 The same analysis found that list prices for the 10 drugs had generally risen faster than overall consumer prices in the years before negotiation.2 The advocacy group Patients For Affordable Drugs puts the average list-price reduction across the 10 drugs at 63%. One example it highlights is the insulin Fiasp, now $119 for a month's supply, a 76% cut.7

The drugs were chosen because Medicare spends heavily on them. GoodRx, citing HHS, reports that the 10 drugs cost Medicare more than $50 billion in gross drug spending in one year and made up about 20% of Part D pharmacy costs.5 Nearly 9 million Part D enrollees use at least one of them, for conditions ranging from heart failure and diabetes to autoimmune disease and cancer.8

The negotiated prices also rise more slowly from here. Each year after the first, CMS will raise a selected drug's price only by the change in the consumer price index, not by whatever increase the manufacturer chooses.1 Some tracking of the program says these drugs' prices had been rising about 7.4% a year before negotiation.6 The inflation cap may matter as much over time as the first-year discount.

The savings numbers don't line up

The main disagreement in the coverage is how much money the program saves, and the answer depends on the comparison point.

CMS's estimate for beneficiaries is about $1.5 billion in out-of-pocket savings under the standard Part D benefit design. That is on top of savings from the Inflation Reduction Act's separate $2,000 annual cap on out-of-pocket drug costs.1 Patients For Affordable Drugs gives context: Medicare patients using these drugs paid $3.9 billion out of pocket in 2023. It expects taxpayers to save about $6 billion in 2026.7 One Medicare data-tracking site repeats the $6 billion figure as the program's first-year savings.6

A peer-reviewed analysis in Value in Health (published on ScienceDirect) finds a smaller effect. It projects that negotiation will cut 2026 Medicare Part D net spending on the 10 drugs by $2.3 billion, or 8.8%, compared with a historical benchmark.9 The gap between that figure and the 63% average list-price discount comes from rebates. List prices were never what Medicare plans actually paid, because manufacturers already gave large confidential rebates. The researchers found that negotiation saves the most on drugs that had small rebates before negotiation or long remaining market exclusivity. It saves less on drugs about to face generic or biosimilar competition.9

In our reading, the list-price discounts mostly show how inflated list prices had become, not how much money is being saved. The more reliable measure is the net-spending reduction, which is real but smaller. Even supportive analysts call first-year savings promising but modest compared with Medicare's annual drug spending of more than $200 billion.6 That does not make the program a failure. It means the first round's main value is the precedent and the cap on future price increases, not a large immediate cut.

The figures also differ on smaller details. Reported baseline spending on the 10 drugs ranges from "more than $50 billion" to $56.2 billion.56 Reported pre-negotiation monthly prices for Enbrel also vary: one source gives $7,106 falling to $2,355, while another gives roughly $6,122 falling to about $2,020.67 The differences probably reflect different reference years and pricing measures. Readers should treat any single dollar figure as approximate.

What patients actually see

For patients, the benefit depends on how their plan charges for drugs. Under the law, manufacturers must make the negotiated price available to pharmacies and other dispensers that fill prescriptions for eligible enrollees.1 A negotiated price is what the plan pays, though. What the patient pays still depends on the plan's deductible, drug tiers and coinsurance.18

AARP's research institute found that this structure is helping. In stand-alone Part D plans in five high-enrollment states, enrollee cost-sharing for the 10 drugs fell by about half on average. The reason is that much cost-sharing is set as a percentage of the drug's price.8 KFF reports another, less-noticed effect: the law's requirement that plans cover selected drugs improved 2026 formulary coverage of the negotiated products.3

Patients who pay a flat copay will notice less. Those paying coinsurance on expensive drugs such as Enbrel or Stelara are likely to notice the most. Combined with the $2,000 cap, some patients' annual drug costs have reportedly dropped by thousands of dollars, though that claim comes from a tracking site's illustrative examples, not a systematic study.6

The program is getting bigger

The first 10 drugs were the smallest round the law allows. The statute requires 15 more drugs for 2027, 15 for 2028, and 20 a year from 2029 on.10 CMS estimates the second-round prices would have saved $12 billion in net covered drug costs had they been in effect in 2024.15

The third round, announced January 27, 2026, is the first to include Part B drugs, which are given in doctors' offices and clinics.1119 The 15 drugs include Biktarvy, Trulicity, Botox, Entyvio, Kisqali and Verzenio. Tradjenta was also chosen for the program's first renegotiation.11 All manufacturers of the 15 drugs agreed to participate.11 Talks must end by October 31, CMS must announce prices by November 30, and the prices take effect in 2028.12 By one count, the 40 drugs selected across three rounds made up about 36% of combined Part B and D drug spending in 2024.13

The consulting firm Avalere notes that 13 of the 15 third-round drugs are in the same therapeutic classes as drugs already negotiated. CMS could therefore use earlier negotiated prices as starting points for new offers, which would build on each round's results.14 Part B also raises new problems. CMS has not yet explained how the negotiated prices will reach doctors' offices, which creates uncertainty about provider reimbursement.14

Political limits

The expansion has limits. The 2025 reconciliation law broadened the orphan-drug exclusion. KFF says this likely delayed the selection of the cancer drugs Keytruda and Opdivo, which probably would have been chosen this year based on Medicare spending.12 CMS's final guidance for the third cycle puts those orphan-drug protections into effect.16 AARP warns that further exemptions would deny patients the lower cost-sharing seen with the first 10 drugs.8

The administration continues to run the program. CMS official Chris Klomp has described it as protecting beneficiaries and taxpayers while keeping incentives for medical innovation.16 Reuters, as cited in one industry summary, reported that shares of the affected manufacturers rose nearly 2% in after-hours trading on the third-round announcement.13 That suggests investors see the program as a manageable cost, not a major threat.

Bottom line

The 2023 list was the program's starting point. The first round shows that Medicare can set prices for high-spending drugs, that manufacturers will take part, and that patients paying coinsurance get real relief. It also shows that list-price discounts overstate the savings, and that the program's long-term effect depends on how many drugs it covers and how many Congress exempts. The next measure comes by November 30, when CMS announces prices for the first Part B drugs.