Medicare announces $6B savings for 2026 through drug price negotiations

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Patients and taxpayers will save billions of dollars through federal efforts to negotiate prices for drugs used by Medicare beneficiaries, according to the U.S. Centers for Medicare & Medicaid Services (CMS).

The administration of President Joe Biden, with CMS and the U.S. Department of Health and Human Services, announced the new prices that will go into effect on Jan. 1, 2026, for people with Medicare Part D prescription drug coverage.

The drug price dickering is “a historic moment that will help lower prescription drug prices for millions of people across America,” according to the CMS announcement. If the new drug had been in effect in 2023, Medicare would have saved an estimated $6 billion, or approximately 22%, across 10 selected drugs.

“CMS is proud to have negotiated drug prices for people with Medicare for the first time. These negotiations will not only lower the prices of critically important medications for cancer, diabetes, heart failure, and more, but will also save billions of dollars,” CMS Administrator Chiquita Brooks-LaSure said in a statement. “Medicare drug price negotiation and the lower prices announced today demonstrate the commitment of CMS and the Biden-Harris Administration to lower health care and prescription drug costs for Americans. We made a promise to the American people, and today, we are thrilled to share that we have fulfilled that promise.”

In the announcement, HHS Secretary Xavier Becerra cited estimates by the Congressional Budget Office that predicted $100 billion in savings over 10 years, with $3.7 billion savings in the first year. The negotiations topped that, with estimated Medicare savings at $6 billion and out-of-pocket spending reductions totaling $1.5 billion for beneficiaries.

“Empowering Medicare to negotiate prices not only strengthens the program for generations to come, but also puts a check on skyrocketing drug prices,” Becerra said in the official news release.

The negotiations are the first step to more. By Feb. 1, 2025, CMS will pick up to 15 more drugs covered by Medicare Part D for price talks for 2027. There will be another 15 covered by Medicare Part B or Part D selected for 2028, and up to 20 more Part B or Part D drugs each year after that, as required by the federal Inflation Reduction Act that Congress passed and the president approved in August 2022.

Starting in 2025, Medicare Part D enrollees also will benefit from out-of-pocket spending limited to $2,000 a year, according to CMS.