Second Round of Medicare-Negotiated Price Cuts Expected to Save Billions in Drug Costs in 2027

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

“AARP applauds CMS for standing firm and using Medicare’s buying power to lower drug prices for older Americans. These negotiations are saving billions and helping millions afford the medications they need to stay healthy,” says Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer.

“The fight isn’t over. Drug companies are spending millions to weaken this law,” she says. “As the voice for 125 million Americans age 50 and over, AARP will keep pushing to ensure full implementation and lasting relief. Lower drug prices mean healthier lives and stronger budgets, and we’re committed to making that permanent.”

Here’s what Medicare spent in 2024 on the 15 medications whose prices were negotiated this year:

1. Ozempic, Rybelsus, Wegovy, used for type 2 diabetes, other indications. $14.4 billion

2. Trelegy Ellipta, used for asthma, chronic obstructive pulmonary disease. $5.1 billion

3. Xtandi, used for prostate cancer. $3.2 billion

4. Pomalyst, used for Kaposi sarcoma, multiple myeloma cancers. $2.1 billion

5. Ibrance, used for breast cancer. $2 billion

6. Ofev, used for pulmonary fibrosis. $2 billion

7. Linzess, used for chronic constipation, irritable bowel syndrome (IBS). $1.9 billion

8. Calquence, used for some types of leukemia and lymphoma. $1.6 billion

9. Austedo, Austedo XR, used for Huntington’s disease, tardive dyskinesia. $1.5 billion

10. Breo Ellipta, used for asthma, chronic obstructive pulmonary disease. $1.4 billion

11. Tradjenta, used for type 2 diabetes. $1.1 billion

12. Xifaxan, used for hepatic encephalopathy, IBS with diarrhea. $1.1 billion

13. Vraylar, used for bipolar disorder, depression, schizophrenia. $1.1 billion

14. Janumet, Janumet XR, used for type 2 diabetes. $1.1 billion

15. Otezla, used for psoriasis, psoriatic arthritis. $1 billion

Some GLP-1s to see 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 same 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, and Medicare spent $14.4 billion on the medications.

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

Here are the Medicare prices for the 15 drugs, ranked from highest discount over list price to lowest:

• Janumet, Janumet XR, negotiated price $80, 2024 list price $526, 85 percent discount
• Tradjenta, negotiated price $78, 2024 list price $488, 84 percent discount
• Breo Ellipta, negotiated price $67, 2024 list price $397, 83 percent discount
• Linzess, negotiated price $136, 2024 list price $539, 75 percent discount
• Trelegy Ellipta, negotiated price $175, 2024 list price $654, 73 percent discount
• Ozempic, Rybelsus, Wegovy, negotiated price $274, 2024 list price $959, 71 percent discount
• Otezla, negotiated price $1,650, 2024 list price $4,722, 65 percent discount
• Xifaxan, negotiated price $1,000, 2024 list price $2,696, 63 percent discount
• Pomalyst, negotiated price $8,650, 2024 list price $21,744, 60 percent discount
• Ibrance, negotiated price $7,871, 2024 list price $15,741, 50 percent discount
• Ofev, negotiated price $6,350, 2024 list price $12,622, 50 percent discount
• Xtandi, negotiated price $7,004, 2024 list price $13,480, 48 percent discount
• Vraylar, negotiated price $770, 2024 list price $1,376, 44 percent discount
• Calquence, negotiated price $8,600, 2024 list price $14,228, 40 percent discount
• Austedo, Austedo XR, negotiated price $4,093, 2024 list price $6,623, 38 percent discount

AARP-backed law is behind historic price negotiations

The 2022 prescription drug law, which AARP strongly supported, contains several provisions designed to reduce prices and related out-of-pocket costs, including finally allowing Medicare to negotiate with companies.

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

The timetable for negotiations with pharmaceutical manufacturers can get confusing. CMS announces a list of drugs by Feb. 1, bargains with drug makers during the year and is required to publish the new prices by Nov. 30 each year from now on.

But the lower prices don’t go into effect for more than a year after they’re set so manufacturers and Part D prescription plans can ready their computer systems, drug coverage lists and marketing. That means a new list of medications for price negotiations will be announced by Feb. 1, 2026, before prices from the 2025 list are rolled out for Medicare beneficiaries Jan. 1, 2027.

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

Older adults remain worried about high medicine costs

Almost 2 in 5 adults 50 and older are concerned about their ability to afford prescription drugs in the next few years, according to a December 2024 AARP survey that included both people of Medicare age and younger. And 96 percent believe the government should do more to lower pharmaceutical prices.

Of the 15 drugs whose new negotiated prices were just released, five had list prices that had more than doubled since they debuted, according to a January 2025 AARP report. The longer a drug is on the market, the more dramatically its price increases.

For example, irritable bowel drug Xifaxan has been available since 2004. Its price increased 253 percent while government measures of inflation were up 67 percent.

Notably, another provision in the 2022 prescription drug law requires drug companies that raise the price of their products by more than the general rate of inflation have to pay Medicare a penalty.

“AARP strongly supported allowing Medicare to negotiate lower prescription drug prices. The latest results provide more confirmation that this process will create billions of dollars in savings for Medicare and its beneficiaries,” AARP’s LeaMond says.