Medicare to Cut Prices on 15 Costly Prescription Drugs in 2027

Fifteen additional expensive and widely used prescription drugs will have lower negotiated prices for Medicare beneficiaries in 2027, the federal government announced late Tuesday.

About 5.3 million beneficiaries use these medications, which account for $40.7 billion in Medicare Part D spending. They treat common conditions like asthma, cancer, COPD, and diabetes.

The lower prices, expected to save an estimated $8.5 billion to $12 billion a year, were negotiated this year between drug companies and the Centers for Medicare & Medicaid Services. When they take effect January 1, 2027, the reduced prices must be available to eligible Medicare beneficiaries and included in all Part D drug plans.

Medicare beneficiaries enrolled in Part D plans will save about $685 million in out-of-pocket costs.

Second Round of Negotiations

The 15 medications constitute the second round of price reductions under a 2022 prescription drug law, backed by AARP, that allows Medicare to negotiate lower drug prices.

The first round of negotiations in 2024 produced lower prices for 10 medications taking effect in 2026. Part D enrollees are expected to save $1.5 billion in out-of-pocket costs next year.

The 25 drugs selected for price negotiations in total represent a third of Medicare Part D spending on prescription medications.

GLP-1s Get Major Price Cuts

The latest 15 Part D drugs were selected from the top 50 Part D drugs eligible for negotiation that have the highest total Medicare expenditures.

The list includes the popular GLP-1s Ozempic, Rybelsus, and Wegovy that use semaglutide as their active ingredient and treat cardiovascular disease, type 2 diabetes, and obesity. About 2.3 million Medicare Part D enrollees used the medication from November 2023 through October 2024. Medicare spent $14.4 billion on these medications.

That's a lot of money. $14.4 billion on one family of medications. So, negotiating lower prices makes a huge difference.

Earlier this month, the White House announced a deal with drug manufacturers Eli Lilly and Novo Nordisk expected to lower prices for their GLP-1 medications in 2026. The administration also said it's creating a pilot program that would, for the first time, make the drugs available through Part D for weight management.

How the Process Works

The timetable for negotiations with pharmaceutical manufacturers gets confusing. CMS announces a list of drugs by February 1, bargains with drug makers during the year, and publishes new prices by November 30 each year.

But the lower prices don't take effect for more than a year after they're set so manufacturers and Part D prescription plans can ready their systems. That means a new list of medications for price negotiations will be announced by February 1, 2026, before prices from the 2025 list roll out for Medicare beneficiaries January 1, 2027.

Companies can opt out of negotiations, but they face a steep tax on U.S. sales if they don't participate. The only way to avoid that tax is to withdraw from Medicare and Medicaid drug programs, which account for about 40 percent of the country's prescription drug spending.

So basically, they can't really opt out.

Future Rounds

For 2028, up to 15 Part D- or Part B-covered drugs will be selected for price negotiation. Up to 20 additional drugs could be selected for 2029 and later years. The number of drugs with negotiated prices will continue growing.

Why This Matters

Almost 3 in 5 adults 50 and older are concerned about their ability to afford prescriptions in the next few years, according to a December 2024 AARP survey. And 96 percent believe the government should do more to lower pharmaceutical prices.

That survey was taken right before a new $2,000 cap on out-of-pocket prescription drug expenses took effect in 2025. The Department of Health and Human Services estimated about 11 million Part D enrollees—20 percent—would reach the limit. The cap increases to $2,100 in 2026.

Five of the 15 drugs more than doubled in price since they debuted. Some increased 253 percent while inflation was up 67 percent. Drug companies raised prices because they could. Now Medicare can push back.

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