Who Actually Saves Money From Medicare's Negotiated Drug Prices?

Key takeaways

• Unlock savings as Medicare drug price negotiations lower out-of-pocket costs for millions, says Tricia Sandiego.
• Drive long-term benefits with new standards that help contain drug prices throughout broader insurance markets.
• Increase access to vital medications and achieve billions in taxpayer savings for a healthier future.

Summary

Medicare drug price negotiation is changing the landscape of prescription costs for millions of Americans, especially those on Medicare Part D. Thanks to a new prescription drug law, Medicare can now negotiate prices for high-cost medications — resulting in lower out-of-pocket costs, slower premium growth and significant savings for enrollees. Starting in 2026, these negotiated prices will cover drugs used for serious conditions like diabetes, heart failure and cancer, with the list expanding each year.

But the benefits don’t stop with Medicare users. As Tricia Sandiego explains, savings ripple outward — setting a new standard that can influence broader insurance markets and help keep drug costs in check for everyone. Lower pharmacy bills, billions in taxpayer savings and increased access to affordable medicines mean these Medicare changes make a difference now and for the future.

The key takeaways and summary were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

Full Transcript:

[00:00:00] When Medicare negotiates drug prices, what are the drugs and who actually saves? Many assume it’s only those signed up for Medicare, but

[00:00:08] the savings go so much further. Let me break down what lower drug prices mean for everyone

[00:00:14] right now and in the future. For the first time ever, Medicare has been able to negotiate the prices of

[00:00:20] high-cost medications for its enrollees. Drug negotiations are expected to save them $1.5 billion

[00:00:27] in out –of-pocket expenses. This is because of a prescription drug law that was passed in August 2022,

[00:00:34] which AARP strongly supported. Negotiations kicked off in 2024 with 10 drugs that

[00:00:41] treat a wide variety of conditions like blood clots, diabetes and heart failure. Keep in mind that these are under Medicare’s Part D plan,

[00:00:51] which covers prescription drugs that you pick up at a pharmacy. Those lower prices are taking effect in January 2026.

[00:00:59] Negotiations for 15 additional medications are already underway. They include drugs used for other commonly treated conditions,

[00:01:07] including type 2 diabetes, asthma and COPD, cancer and digestive disorders like IBS. Oh, and by the way,

[00:01:16] drugs that are covered under Medicare Part B, which covers outpatient procedures, will be added to the negotiation program in 2026 for prices

[00:01:26] that will be become available in 2028. Each year, more medications will be added. Negotiations will take place, and over time the lower costs

[00:01:37] will translate into lower costs for Medicare beneficiaries. This is great news, but who actually saves

[00:01:43] money from the new prices in 2026? If you’re on Medicare Part D, you. You’ll directly benefit

[00:01:50] from slower premium growth. And if you’re taking one of the negotiated drugs, lower cost sharing. And there

[00:01:57] could be savings for everyone else as the new Medicare negotiated drug prices could set a new standard for other

[00:02:03] insurers. The best part is you don’t have to do anything for these savings. Changes are coming automatically, so keep an eye on your prescriptions.

[00:02:11] So how will these cost savings play out for you? It will depend on the drugs you take and your plan.

[00:02:17] If your prescriptions aren’t on the negotiated drug list, your costs probably won’t be affected immediately.

[00:02:24] But let’s say your drug is on the list. With the prices of these drugs going down, your coinsurance cost — the

[00:02:30] portion of the cost you pay out-of-pocket — will go down as well. For example, if a drug originally costs $500 and your coinsurance

[00:02:39] is 25%, you’d pay $125. If the negotiated price drops to $250, your coinsurance

[00:02:48] would be $62.50. And if you’re on a Medicare plan that uses fixed copayments instead

[00:02:55] of percentages, those costs may be adjusted downward as well. Broader savings are expected to roll out over time as more drugs are added.

[00:03:04] Medicare’s new drug price negotiations don’t just help seniors — they help everyone. Lower prices mean smaller pharmacy bills, billions in taxpayer savings and pressure

[00:03:15] to keep costs down across the board. To learn more about this and other Medicare topics, visit

[00:03:22] aarp.org/medicare.