AARP Hearing Center
Second Round of Medicare-Negotiated Price Cuts Expected to Save Billions in Drug Costs in 2027
The savings on 15 high-cost medications include popular Ozempic family of weight-loss drugs
Rob Dobi
Key takeaways
- 5.3 million on Medicare use these medicines, will benefit.
- Second round of price reductions debut in 2027.
- Medicare will spend a lot less on Ozempic family of meds.
- Another 15 drugs will be selected for 2028, 20 for 2029.
- High medication costs are high priority for older adults.
Fifteen additional expensive and widely used prescription drugs will have lower negotiated prices for Medicare beneficiaries in 2027, the federal government announced Nov. 25.
About 5.3 million beneficiaries use these medications, which accounted for $42.5 billion in 2024 Medicare Part D spending, to treat common conditions such as asthma, cancer, chronic obstructive pulmonary disease (COPD) and diabetes.
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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 (CMS). When they take effect Jan. 1, 2027, the reduced prices must be made available to eligible Medicare beneficiaries and must be included among the covered drugs for all stand-alone Part D drug plans available for people in original Medicare and Medicare Advantage prescription drug plans.
Medicare beneficiaries enrolled in Part D plans will save about $685 million in out-of-pocket costs.
“Older Americans across the political spectrum consistently say lower drug prices are a top priority, and these negotiated prices will bring meaningful relief to millions of people on Medicare,” says Dr. Myechia Minter-Jordan, AARP’s CEO. “We thank the administration for ensuring Medicare's ability to negotiate lower drug prices is protected so older Americans benefit for decades to come.”
Medicare’s second negotiations to lower prices
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 for its beneficiaries.
The first round of Medicare drug price negotiations in 2024 produced lower prices, which take effect in 2026, for 10 medications. As a result, 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, 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.”
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 in 2024, and Medicare spent $15.2 billion on the medications.
Earlier in November, the White House announced a deal with drug manufacturers Eli Lilly and Novo Nordisk that will lower prices for their GLP-1 medications in 2026. The administration also is creating a pilot program that will, for the first time, make the drugs available through Part D for weight management.
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 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 that included both people of Medicare age and younger. 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 federal Department of Health and Human Services, which oversees Medicare, estimated in January 2025 that about 11 million Part D enrollees, 20 percent, would reach the limit. The cap increases to $2,100 in 2026.
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.
VIDEO: AARP’s Fight Pays Off with Medicare Rx Drug Savings
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This story, originally published Nov. 25, 2025, was updated to show total Part D spending on the 15 negotiated drugs and GLP-1 medication spending for all of 2024. The previous numbers reflected November 2023 to October 2024.
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