Medicare's Drug Price Negotiation Program: What It Means for Beneficiaries in 2026 and Beyond

For decades, Medicare was prohibited by law from negotiating prescription drug prices with pharmaceutical companies. While the Department of Veterans Affairs, Medicaid, and even private insurers could bargain for lower prices, Medicare had to accept whatever price drug manufacturers set. That changed with the Inflation Reduction Act of 2022, which gave Medicare the authority to directly negotiate prices for certain high-cost drugs for the first time in the program's history.

The results are now real. As of January 1, 2026, ten of the most expensive drugs covered under Medicare Part D have negotiated prices in effect. Fifteen more drugs will see price reductions starting January 2027. And in June 2026, CMS proposed a permanent framework that will expand the program to include Part B drugs (those administered in doctors' offices and clinics) beginning in 2029. This article explains what the program means for you as a Medicare beneficiary, which drugs are affected, and how much you could save.

What Is the Medicare Drug Price Negotiation Program?

The Medicare Drug Price Negotiation Program (MDPNP) allows CMS to negotiate directly with pharmaceutical companies to set a Maximum Fair Price (MFP) for certain high-cost drugs. The program targets drugs that meet specific criteria: they must be single-source (no generic or biosimilar competition), have been on the market for at least 7 years (or 11 years for biologics), and rank among the highest-spending drugs in Medicare.

The negotiation process is structured and transparent. CMS considers factors including the drug's clinical effectiveness, the availability of therapeutic alternatives, research and development costs, and the drug's current net price after rebates. Drug companies participate voluntarily, though opting out carries significant financial penalties. Once a price is agreed upon, it becomes the maximum amount that Medicare Part D plans pay for that drug, and beneficiary cost-sharing is calculated based on the lower negotiated price rather than the original list price.

The 10 Drugs with Lower Prices in 2026

The first round of negotiated prices took effect on January 1, 2026. These 10 drugs accounted for $56.2 billion in total Part D spending in 2023 and were used by approximately 8.8 million Medicare beneficiaries. CMS estimates that if these negotiated prices had been in effect during 2023, Medicare would have saved $6 billion (a 22% reduction in net spending), and beneficiaries would have saved $1.5 billion in out-of-pocket costs.

If you currently take any of these medications, you should already be seeing lower costs at the pharmacy. The negotiated price replaces the previous list price for purposes of calculating your copay or coinsurance under your Part D plan. For example, a beneficiary taking Januvia who previously paid a percentage of the $527 list price now pays a percentage of the $113 negotiated price instead.

15 More Drugs Coming in 2027

CMS completed its second round of negotiations in November 2025, and 15 additional Part D drugs will have negotiated prices effective January 1, 2027. These drugs accounted for $42.5 billion in total Part D spending in 2024 and were used by 5.3 million beneficiaries. CMS estimates even greater savings from this round: $12 billion in net Medicare savings (44% lower spending) and $685 million in direct beneficiary out-of-pocket savings.

The 2027 list includes several blockbuster medications that affect millions of beneficiaries. Ozempic and Wegovy (semaglutide), which treat diabetes, cardiovascular disease, and obesity, will drop from $959 to $274 per month, a 71% reduction. This is particularly significant because Ozempic alone accounted for over $15 billion in Medicare Part D spending in 2024. Breo Ellipta, used by over 626,000 beneficiaries for asthma and COPD, will see an 83% price cut, dropping from $397 to just $67 per month.

What Is Coming in 2028 and Beyond

In January 2026, CMS announced 15 drugs selected for the third round of negotiations. For the first time, this list includes drugs covered under Medicare Part B, which are medications administered in doctors' offices, outpatient clinics, and infusion centers. Negotiated prices for these drugs will take effect January 1, 2028.

Looking further ahead, CMS published a 133-page proposed rule in June 2026 establishing a permanent framework for the program. Starting with the fourth cycle (prices effective in 2029), up to 20 new drugs will be selected each year. This is also when Part B drugs, including expensive infused cancer treatments like Keytruda (pembrolizumab), are expected to enter negotiation. Keytruda is the single highest-spending drug in all of Medicare Part B, accounting for $5.6 billion in 2023 spending alone.

How Negotiated Prices Work with the Out-of-Pocket Cap

The drug price negotiation program works in tandem with another major Inflation Reduction Act provision: the annual Part D out-of-pocket cap. In 2026, no Medicare beneficiary will pay more than $2,100 out of pocket for covered Part D prescription drugs in a calendar year. Once you hit that cap, your Part D plan covers 100% of your remaining drug costs for the rest of the year.

Here is how the two provisions interact: because negotiated prices lower the total cost of your drugs, your copays and coinsurance at the pharmacy are calculated on a smaller amount. This means your out-of-pocket spending accumulates more slowly toward the $2,100 cap. For beneficiaries taking multiple expensive medications, you may find that you no longer hit the cap at all, saving money throughout the entire year rather than just after reaching catastrophic coverage.

For beneficiaries on a single high-cost drug, the math works differently. If you take Imbruvica for chronic lymphocytic leukemia, for example, even at the negotiated price of $9,319 per month, your cost-sharing will still push you to the $2,100 cap relatively quickly. But you will reach it paying less each month along the way, and the Medicare Prescription Payment Plan (M3P) allows you to spread that $2,100 into predictable monthly installments of $175 per month.

What This Means for Cancer Patients

Cancer patients stand to benefit significantly from the negotiation program. Several of the most expensive cancer drugs are included in the first three rounds of negotiations, covering blood cancers, breast cancer, prostate cancer, and multiple myeloma. The savings for these medications are substantial.

For oral cancer drugs covered under Part D, the $2,100 annual out-of-pocket cap provides an absolute ceiling on what you will pay. A beneficiary taking Pomalyst for multiple myeloma previously faced potential annual costs exceeding $6,000 out of pocket before reaching catastrophic coverage. Now, with the negotiated price and the OOP cap combined, the maximum annual cost is $2,100 regardless of how expensive the drug is.

However, many cancer drugs are administered intravenously in clinics and covered under Medicare Part B rather than Part D. These include immunotherapy drugs like Keytruda, infused chemotherapy regimens, and targeted biologics. Part B drugs are not yet subject to negotiated prices (that begins in 2029), and Part B has no annual out-of-pocket cap under Original Medicare. Beneficiaries receiving Part B cancer drugs pay 20% coinsurance with no limit, which is why having a Medicare Supplement plan or a Medicare Advantage plan with a maximum out-of-pocket limit is critical for cancer patients.

Could Lower Drug Prices Affect Your Access to Care?

While lower drug prices are unambiguously good for beneficiaries at the pharmacy counter, some healthcare policy experts have raised concerns about potential downstream effects, particularly for drugs covered under Part B. Medical oncology practices, for example, derive 70 to 80 percent of their revenue from medications they purchase and administer to patients. Medicare reimburses these practices at the drug's Average Sales Price plus a 6% add-on fee. When the price of a drug drops significantly, that 6% margin shrinks proportionally.

Industry observers have noted that if Part B drug prices are cut by 40 to 60 percent through negotiation (as has happened with Part D drugs), independent oncology practices could face serious financial pressure. Some may consolidate, be acquired by hospital systems or private equity firms, or close satellite offices in rural areas. This is a concern worth monitoring, though it is important to note that Part B negotiation does not begin until 2029, and CMS has indicated it will consider the impact on provider access when setting prices.

For beneficiaries, the practical takeaway is this: if you receive infused medications at an independent clinic, pay attention to whether your provider remains in your network and continues offering services in your area. If your oncologist or specialist practice changes ownership or location, your Medicare Advantage plan's network may be affected. Beneficiaries on Original Medicare with a Medigap plan have more flexibility, since they can see any Medicare-accepting provider nationwide.

What You Should Do Now

If you take any of the 10 drugs with negotiated prices already in effect, verify that your pharmacy is charging you based on the new lower price. Your Part D plan should automatically apply the Maximum Fair Price, but it is worth checking your Explanation of Benefits statements to confirm your cost-sharing reflects the reduced amount.

If you take any of the 15 drugs with negotiated prices starting in 2027, mark the Annual Enrollment Period (October 15 through December 7, 2026) on your calendar. This is your opportunity to review Part D plans and ensure you are in a plan that offers the best formulary placement and cost-sharing for your medications at the new prices. Some plans may restructure their tiers in response to negotiated prices.

For beneficiaries taking expensive medications who expect to reach the $2,100 out-of-pocket cap, consider enrolling in the Medicare Prescription Payment Plan (M3P) to spread your costs into predictable monthly payments. Contact your Part D plan directly to sign up.

Finally, if you are on Original Medicare without supplemental coverage and take Part B drugs (infused medications), strongly consider enrolling in a Medigap plan to cover the 20% coinsurance, or evaluate Medicare Advantage plans with lower maximum out-of-pocket limits. Until Part B negotiation takes effect in 2029, the 20% coinsurance on expensive infused drugs remains one of the largest financial risks for Medicare beneficiaries.

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