How Medicare Drug Price Negotiation Works Under the Inflation Reduction Act
Medicare Part D negotiated drugs 2026 refers to the first set of prescription medications for which the federal government directly negotiated lower prices with manufacturers, under the Inflation Reduction Act.1
The Inflation Reduction Act of 2022 gave the Centers for Medicare & Medicaid Services (CMS) the authority to negotiate prices directly with drug manufacturers for certain high-cost medications covered under Medicare Part D.2 This marked the first time Medicare could negotiate drug prices, a power it had been prohibited from exercising since the program's creation in 2003.
The negotiation process targets drugs that meet specific criteria: they must be among the highest-spending Part D medications, have no generic or biosimilar competition, and have been on the market for at least seven years for small-molecule drugs or eleven years for biologics.1 CMS selects a new set of drugs each year, with negotiated prices taking effect two years after selection.
For the first round, CMS selected ten drugs that accounted for approximately 20% of total Part D gross spending in 2023.2 The negotiated prices represent discounts ranging from 38% to 79% off the list price.3 These are not maximum allowable costs — they are the actual prices Part D plans must offer to enrollees who use the selected drugs.
What the 2026 Medicare Part D Negotiated Drug List Means for You
If you take any of the ten medications on the 2026 list, the negotiated prices could significantly reduce your out-of-pocket costs. However, the savings you actually see depends on your specific Part D plan's formulary and how the plan applies the negotiated price within its benefit structure.
The negotiated price becomes the baseline that your Part D plan uses to calculate your cost-sharing. For example, if you have a 25% coinsurance for a Tier 3 drug, and the negotiated price is 50% lower than the 2025 list price, your coinsurance payment drops by roughly half as well. This effect compounds throughout the year as you move through the coverage phases.
Consider a retiree named Sarah who takes Eliquis for atrial fibrillation. In 2025, she pays a 25% coinsurance on a list price of approximately $600 per month, or $150 monthly.3 Under the 2026 negotiated price of roughly $230 per month, her coinsurance drops to about $58 per month — a savings of over $1,100 annually.
Full List of the 10 Drugs Selected for Medicare Price Negotiation
| Drug Name | Primary Use | 2026 Negotiated Price (30-day supply) | Discount from 2025 List Price |
|---|---|---|---|
| Eliquis | Blood thinner (atrial fibrillation) | $231 | 56% |
| Jardiance | Diabetes / heart failure | $197 | 66% |
| Xarelto | Blood thinner | $197 | 62% |
| Januvia | Diabetes | $113 | 79% |
| Farxiga | Diabetes / heart failure | $178 | 68% |
| Entresto | Heart failure | $295 | 53% |
| Enbrel | Rheumatoid arthritis / psoriasis | $2,355 | 67% |
| Imbruvica | Blood cancers | $4,695 | 38% |
| Stelara | Psoriasis / Crohn's disease | $4,695 | 66% |
| Fiasp / NovoLog | Diabetes (insulin) | $119 | 76% |
Source: CMS negotiated price list, 20263
How the New Prices Compare to Current 2025 Costs
The gap between 2025 list prices and 2026 negotiated prices is substantial across all ten drugs. Eliquis, the most widely used medication on the list, drops from a list price of approximately $521 per month to $231 — a 56% reduction.3 Jardiance falls from about $573 to $197, a 66% cut.
For insulin products like Fiasp and NovoLog, the negotiated price of $119 per month represents a 76% discount from the 2025 list price of approximately $495.4 This is in addition to the existing $35 monthly cap on insulin costs under the Inflation Reduction Act, meaning some insulin users may see even lower effective costs.
The largest percentage discount applies to Januvia, a diabetes medication, which drops 79% from about $527 to $113 per month.3 For Imbruvica, a blood cancer drug, the 38% discount brings the price from approximately $7,570 down to $4,695 per month — a dollar savings of roughly $2,875 monthly despite the smaller percentage reduction.3
Which Medicare Beneficiaries Will See the Biggest Savings
Beneficiaries who reach the Part D coverage gap, commonly called the doughnut hole, will see the most dramatic savings. In 2025, once total drug costs exceed $4,660, you enter the coverage gap where you pay 25% of drug costs until you reach the catastrophic threshold of $7,400.1 Lower negotiated prices mean you spend less while in the gap and may not reach the catastrophic threshold at all.
Suppose a beneficiary named Michael takes both Eliquis and Jardiance. In 2025, his combined monthly drug costs at list price total roughly $1,100.2 He enters the coverage gap by April and reaches the catastrophic threshold by August, paying approximately $3,700 out-of-pocket for the year.2 Under 2026 negotiated prices, his monthly costs drop to about $428.2 He enters the gap later, around July, and may not reach the catastrophic threshold at all, saving roughly $2,000 annually.3
Beneficiaries with high drug costs who currently fall into the catastrophic coverage phase will also benefit. Since the catastrophic threshold is based on true out-of-pocket costs (TrOOP), lower negotiated prices mean you accumulate TrOOP more slowly, potentially delaying or avoiding the catastrophic phase entirely.
How These Drug Price Cuts Affect Your Part D Premium and IRMAA
The negotiated prices do not directly change your Part D premium or Income-Related Monthly Adjustment Amount (IRMAA). Your Part D premium is set by your plan and approved by CMS each year. However, lower drug costs for the plan may indirectly affect premium trends over time.
Part D plans receive federal subsidies and charge premiums based on expected drug costs. If negotiated prices reduce plan costs significantly, some plans may keep premium increases smaller than they otherwise would have been. The Congressional Budget Office estimated that drug price negotiation would reduce federal spending by approximately $98.5 billion over ten years, with some savings potentially flowing back to beneficiaries through lower premiums.4
IRMAA, the surcharge on Part B and Part D premiums for higher-income beneficiaries, is based on your modified adjusted gross income (MAGI) from two years prior. It is not affected by drug price negotiations. If you pay IRMAA in 2026, your Part D premium surcharge remains the same regardless of negotiated drug prices. The surcharge ranges from $12.90 to $81.00 per month per drug plan in 2025, depending on income level.5
What Retirees Should Do Now to Prepare for 2026 Drug Pricing
First, check whether any of the ten negotiated drugs are on your current Part D plan's formulary. If you take Eliquis, Jardiance, Xarelto, or another listed medication, confirm that your plan covers it in 2026 and at what tier. Plans may adjust formularies annually, and a drug that was covered in 2025 may move to a different tier or require prior authorization in 2026.
Second, review your total drug costs for 2025. Add up what you paid out-of-pocket for each prescription, including deductibles, copayments, and coinsurance. Compare this to what you would pay under the 2026 negotiated prices using the table above. If the difference is significant, consider whether your current plan still offers the best value. At Smart Money After 60, we recommend running this comparison every year during AEP — drug costs change, and so do plan structures.
Third, use the Medicare Plan Finder at Medicare.gov during the Annual Enrollment Period (AEP), which runs from October 15 to December 7 each year. Enter your medications and preferred pharmacies to see which plans offer the lowest total costs for 2026. Pay attention to each plan's premium, deductible, and cost-sharing structure, not just the negotiated drug price.
Your Next Step
Log into your Medicare account at Medicare.gov and run the Plan Finder tool with your current medications. Compare your 2025 plan against the top three lowest-cost Part D plans available in your area for 2026. Focus on total estimated annual costs — premium plus deductible plus estimated drug costs — not just the monthly premium. If you take any of the ten negotiated drugs, the savings from switching to a plan that covers them at a preferred tier could exceed $1,000 per year. Complete this comparison before the AEP deadline on December 7.