Medicare's first negotiated drug prices, agreed in 2024 and in force since 2026: what changes next

On August 15, 2024, the Centers for Medicare & Medicaid Services (CMS) published the first prices Medicare had negotiated directly with drug companies, for 10 drugs covered under Part D, the program's prescription drug benefit. The prices, which the law calls maximum fair prices, went into effect across the United States on January 1, 2026.

The negotiations were created by the Inflation Reduction Act of 2022, which for the first time let Medicare negotiate the prices of certain high-spending drugs that have no generic or biosimilar competition. CMS sent an initial offer for each drug on February 1, 2024, the companies answered with counteroffers, and the negotiation period ended on August 1, 2024, with agreements for all 10 drugs. Five prices were agreed in negotiation meetings. For the other five, the companies accepted CMS's written final offers.

CMS had picked the 10 drugs in August 2023 on the basis of their gross Part D costs from June 2022 to May 2023 and other criteria in the law. Drug companies and the public could send in data until October 2, 2023. In setting its offers, CMS weighed factors the law lists, including evidence on alternative treatments and the companies' costs for research and development, production and distribution. It has since published an explanation of each agreed price, with proprietary information redacted.

The 10 drugs and their prices

In the same fact sheet, CMS said about 8.8 million of the 54 million people with Part D coverage were dispensed these drugs in 2023, when they accounted for $56.2 billion, or about 20%, of Part D's gross drug costs. Had the prices applied that year, CMS estimated, Medicare's net spending on the 10 drugs would have been about $6 billion, or 22%, lower. It projected that people enrolled in Part D would save an estimated $1.5 billion in 2026 under the standard benefit design.

How the price reaches the pharmacy counter

By law, each drug's manufacturer must make the negotiated price available to people with Medicare and to the pharmacies and other providers that dispense the drug, and every Part D plan must include the drugs in its list of covered drugs. A CMS system, the Medicare Transaction Facilitator, began operating on January 1, 2026, to support this. It passes claims data to manufacturers, which use it to work out the refunds they owe pharmacies for drugs dispensed to eligible people with Medicare. In April 2026, CMS said the refunds were reaching pharmacies' bank accounts within 21 days of the date of service, on average.

What each person pays still depends on their plan. Medicare.gov says your total costs depend on the plan you choose, and that out-of-pocket spending on covered Part D drugs is capped at $2,100 in 2026. Once you reach the cap, you pay nothing more for covered Part D drugs that year.

What changes on January 1, 2027

Four of the 10 drugs will leave the program. CMS stops treating a drug as selected under certain circumstances, such as when a generic or biosimilar version is approved and marketed. It made that determination for Stelara, Entresto and Xarelto in October 2025 and for NovoLog and Fiasp in March 2026, with removal effective January 1, 2027.

For the other six, the law raises the negotiated price every year by the annual increase in the Consumer Price Index for all urban consumers. CMS's price file, updated on September 21, 2026, lists the 2027 prices, each about 2.7% higher than in 2026.

Fifteen more Part D drugs get negotiated prices from January 1, 2027, after a second round of negotiations. They include Ozempic, Wegovy and Rybelsus, for which CMS gives a negotiated price of $274 for a 30-day supply against a 2024 list price of $959. A third round, for 15 drugs covered under Part D, payable under Part B, or both, is being negotiated in 2026, and any prices agreed take effect beginning in 2028.

What to check now

Medicare's open enrollment period runs from October 15 to December 7, and coverage chosen then starts on January 1. Medicare.gov says no drug plan may have a deductible above $700 in 2027, up from $615 in 2026, and that the cap on out-of-pocket spending on covered Part D drugs rises to $2,400 in 2027. People with limited income may qualify for Extra Help, a Medicare program that helps with drug costs.

The yearly price update follows the Consumer Price Index for All Urban Consumers; our guide to the Consumer Price Index explains how that index is built.