Aug. 15, 2024 – CMS.gov Newsroom
In August 2022, President Biden signed the Inflation Reduction Act of 2022 (P.L. 117-169) into law. The law makes improvements to Medicare by expanding benefits, lowering drug costs, and improving the sustainability of the Medicare program for generations to come. The law provides meaningful financial relief for millions of people with Medicare by improving access to affordable treatments and strengthening Medicare, both now and in the long run.
For the first time, the law provides Medicare the ability to directly negotiate the prices of certain high expenditure, single source drugs without generic or biosimilar competition. The Centers for Medicare & Medicaid Services (CMS) selected ten drugs covered under Medicare Part D for the first cycle of negotiations for initial price applicability year 2026 and engaged in voluntary negotiations with the drug companies for the selected drugs. Below is the list of negotiated prices, which the statute refers to as Maximum Fair Prices (MFPs), for 10 drugs covered under Medicare Part D that will go into effect beginning January 1, 2026, based on negotiations and agreements reached between CMS and participating drug companies.
CMS negotiated in good faith consistent with the requirements of the law on behalf of people with Medicare and the Medicare program. Throughout the negotiation process, the CMS team considered the factors outlined in the law in negotiating these prices, which supports the need for innovation and drug development with better prices for people with Medicare and the Medicare program.
CMS engaged in genuine, thoughtful negotiations with each participating drug company. CMS developed an initial offer for each drug, consistent with the process described in the statute and the agency’s guidance, and each manufacturer responded with a counteroffer. CMS held three meetings with each participating drug company to discuss the offers and counteroffers, discuss evidence, and attempt to arrive at a mutually acceptable price for the drug. During the negotiation process, CMS revised its offers for each of the drugs upward in response to these discussions. Likewise, many drug companies revised their counteroffers for their drugs downward, based on the discussions with CMS. For five of the selected drugs, this process of exchanging revised offers and counteroffers resulted in CMS and the drug company reaching an agreement on a negotiated price for the drug in association with a negotiation meeting. In four of these cases, CMS accepted a revised counteroffer proposed by the drug company. For the remaining five selected drugs, CMS sent a written final offer to those drug companies, consistent with the process described in its guidance, and in each instance, the drug company accepted CMS’s offer on or before the statutory deadline.
List of the first ten drugs whose 30-day supply price has been negotiated lower with Medicare:
Januvia – $113 down from $527; used by 843,000 enrollees in 2023
NovoLog – $119 down from $495; used by 785,000 enrollees in 2023
Farxiga – $178 down from $556; used by 994,000 enrollees in 2023
Enbrel – $2,355 down from $7,106; used by 48,000 enrollees in 2023
Jardiance – $197 down from $573; used by 1,883,000 enrollees in 2023
Stelara – $4,695 down from $13,836; used by 23,000 enrollees in 2023
Xarelto – $197 down from $517; used by 1,324,000 enrollees in 2023
Eliquis – $231 down from $521; used by 3,928,000 enrollees in 2023
Entresto – $295 down from $628; used by 664,000 enrollees in 2023
Imbruvica – $9,319 down from $14,934; used by 17,000 enrollees in 2023
For those enrolled in a Medicare Advantage plan with Rx drug coverage as well as those enrolled in a stand-alone Part D Rx drug plan, the new negotiated price becomes the new “retail” price for purposes of calculating the co-insurance amount billed to the insured. For example, assuming Xarelto is a tier 3 drug according to your plan’s drug formulary and the tier 3 co-insurance is 22% of retail, you will pay $43.34 for a 30-day supply ($197 x .22).
Projected Savings for People with Medicare Part D Coverage:
When the negotiated prices go into effect Jan. 1, 2026, collectively people enrolled in Medicare prescription drug coverage using these medications will save an estimated $1.5 billion. These savings are in addition to savings from the $2,000 maximum out-of-pocket limit on all drugs for those with Medicare prescription drug coverage which went into effect Jan. 1, 2024.