Medicare announces new negotiated drug price reductions
Popular weight loss drugs, Ozempic and Wegovy, are included
Updated:
Photo by Jeff Trierweiler on Unsplash
Key Insights
- Medicare has reached price-cut agreements for 15 widely used, high-cost prescription drugs, with new lower prices taking effect in 2027.
- More than 5.3 million seniors and other Part D enrollees used these medications in 2024, meaning the discounts will have a broad impact.
- Projected savings include $12 billion for Medicare and $685 million in reduced out-of-pocket spending for beneficiaries in 2027.
The Centers for Medicare & Medicaid Services (CMS) has struck new agreements to lower the prices of 15 high-cost prescription medications, the latest price reductions in the Medicare Drug Price Negotiation Program.
The negotiated prices, set to take effect in 2027, represent some of the steepest discounts Medicare has ever secured and promise major financial relief for millions of older Americans.
The selected drugs, all covered under Medicare Part D, treat an array of common and serious conditions, including cancer, diabetes, asthma, irritable bowel syndrome, and chronic obstructive pulmonary disease.
According to CMS, more than 5.3 million beneficiaries used these medications in 2024, underscoring the widespread impact of the price reductions.
Billions in expected savings
If the negotiated prices had been in place in 2024, Medicare estimates it would have saved $12 billion, a figure that underscores the program’s long-term financial implications. Beneficiaries themselves are expected to save $685 million in out-of-pocket costs in 2027, when the new prices go live.
Federal officials say these savings strengthen Medicare’s long-term sustainability, ensuring broader access to essential medications “now and for generations to come.”
The negotiated discounts vary widely by medication but are substantial across the board. Among the largest price cuts:
- Janumet / Janumet XR (type 2 diabetes): 85% discount
- Breo Ellipta (asthma, COPD): 83%
- Tradjenta (type 2 diabetes): 84%
- Ozempic, Rybelsus, Wegovy (diabetes, cardiovascular disease, obesity): 71%
- Trelegy Ellipta (asthma, COPD): 73%
- Linzess (chronic constipation / IBS-C): 75%
- Otezla / Otezla XR (psoriasis, psoriatic arthritis): 65%
- Xifaxan (hepatic encephalopathy / IBS-D): 63%
- Pomalyst (multiple myeloma, Kaposi sarcoma): 60%
Other important drugs receiving major price drops include:
- Ibrance (breast cancer): 50%
- Ofev (idiopathic pulmonary fibrosis): 50%
- Xtandi (prostate cancer): 48%
- Vraylar (bipolar disorder, major depression, schizophrenia): 44%
- Calquence (leukemia/lymphoma): 40%
- Austedo / Austedo XR (Huntington’s chorea, tardive dyskinesia): 38%
Officials stress that these reductions apply to all dosage forms and strengths of each drug.
More help for seniors
In addition to the newly negotiated prices, several other cost-saving measures are arriving soon for Medicare beneficiaries:
- A $2,100 annual cap on out-of-pocket prescription drug costs begins in 2026, marking the first hard limit on Part D expenses in Medicare’s history.
- Expanded eligibility for the Extra Help program will make it easier for lower-income seniors to receive assistance with premiums and drug costs.
CMS encourages beneficiaries to check eligibility at Medicare.gov/extrahelp.
The Medicare Drug Price Negotiation Program was established to address rising prescription costs by allowing Medicare – long barred from negotiating – to directly engage drug manufacturers on pricing. This second cycle of negotiations builds on the program’s inaugural set of negotiated drugs and positions Medicare to continue reducing costs for some of the nation’s most vulnerable patients.
With tens of millions relying on Medicare for their health coverage, the newly negotiated prices are expected to reshape affordability, widen access to life-saving treatments, and significantly ease the financial burden on older Americans.