On January 17, 2025, the U.S. Department of Health and Human Services (HHS) announced the next 15 drugs selected for price negotiations under the Medicare Drug Price Negotiation Program. These newly negotiated prices will take effect on January 1, 2027.
Authorized by the Inflation Reduction Act (IRA) of 2022, the program grants the Centers for Medicare & Medicaid Services (CMS) the authority to negotiate prices directly with drug manufacturers. The goal is to curb rising prescription costs and make essential medications more affordable for Medicare beneficiaries.
The first 10 drugs selected for negotiation will see their new prices go into effect on January 1, 2026. Here’s a look at the 15 additional drugs set for negotiation in 2027.
Which Drugs Will Be Eligible for Price Negotiation in 2027?
According to CMS, from November 2023 to October 2024, approximately 5.3 million Medicare Part D beneficiaries used the 15 newly selected drugs to treat a range of conditions, including cancer, type 2 diabetes, and asthma. These medications represented roughly $41 billion in gross prescription drug costs under Medicare Part D during that period—about 14% of the program’s total costs.
Below is the list of additional drugs eligible for price negotiation in 2027. Keep in mind that CMS may also renegotiate prices for previously selected drugs or adjust them annually based on the Consumer Price Index (CPI-U). This ensures that prices remain aligned with inflation and market changes.
Qualifying Chronic Conditions
| Drug Name | Commonly Treated Conditions* | Total Part D Gross Covered Prescription Drug Costs from November 2023 to October 2024 | Number of Medicare Part D Enrollees Who Used the Drug from November 2023 to October 2024 |
|---|---|---|---|
| Ozempic Rybelsus Wegovy |
|
$14,426,566,000 | 2,287,000 |
| Trelegy Ellipta |
|
$5,138,107,000 | 1,252,000 |
| Xtandi |
|
$3,159,055,000 | 35,000 |
| Pomalyst |
|
$2,069,147,000 | 14,000 |
| Ibrance |
|
$1,984,624,000 | 16,000 |
| Ofev |
|
$1,961,060,000 | 24,000 |
| Linzess |
|
$1,937,912,000 | 627,000 |
| Calquence |
|
$1,614,250,000 | 15,000 |
| Austedo Austedo XR |
|
$1,531,855,000 | 26,000 |
| Breo Ellipta |
|
$1,420,971,000 | 634,000 |
| Tradjenta |
|
$1,148,977,000 | 278,000 |
| Xifaxan |
|
$1,128,314,000 | 104,000 |
| Vraylar |
|
$1,085,788,000 | 116,000 |
| Janument Janument XR |
|
$1,082,464,000 | 243,000 |
| Otezla |
|
$994,001,000 | 31,000 |
Source: CMS.gov
*The commonly treated conditions are limited to conditions for which prescription drug coverage is currently available under the Medicare Part D program.
How Did CMS Select the 15 Drugs for the Second Negotiation Cycle?
The Centers for Medicare & Medicaid Services (CMS) follows specific criteria when selecting drugs for the Medicare Drug Price Negotiation Program. To be eligible for negotiation, a drug must meet the following requirements:
- Brand-name drugs or biologics
- Among the top 50 negotiation-eligible drugs with the highest total Medicare Part D spending (excluding those granted a Small Biotech Exception and drugs selected in the first negotiation cycle)
- Among the top 50 negotiation-eligible drugs with the highest total Medicare Part B spending
Drugs Excluded from Negotiation
Certain types of drugs do not qualify for negotiation under this program, including:
- Generic drugs or those with available biosimilars
- Small-molecule drugs less than eight years from FDA approval or biologics less than 12 years from FDA licensure
- Certain small biotech drugs (from 2026 to 2028) that do not meet the criteria for the Small Biotech Exception
- Low-spend Medicare drugs
- Plasma-derived products
- Orphan drugs with FDA approval only for treating rare conditions
Next Steps for Drug Manufacturers
Drug manufacturers with a selected drug must decide whether to participate in negotiations by February 28, 2025. Those that opt in will work with CMS to establish fair, negotiated prices for Medicare beneficiaries starting in 2027.
Is Participation in the Medicare Drug Price Negotiation Program Mandatory for Manufacturers?
Participation in the Medicare Drug Price Negotiation Program is voluntary for drug manufacturers. However, those who choose not to participate will face a significant tax on their sales as a penalty.
Once a drug’s price has been negotiated, manufacturers have two options:
- Accept the negotiated price
- Withdraw from the Medicare and Medicaid programs
The deadline for manufacturers to accept CMS’s final maximum fair price offer is October 31, 2025. Failure to meet this deadline may result in withdrawal from federal health programs.
When Will Savings from Medicare Drug Price Negotiations Take Effect?
Although CMS recently announced 15 additional drugs for negotiation, Medicare beneficiaries won’t experience the savings until January 1, 2027. The negotiation process will take place throughout 2025, with the new prices becoming effective in 2027.
The negotiation timeline concludes well in advance of the effective date to give manufacturers sufficient time to prepare for the changes. The process is thorough and takes multiple factors into account, including:
- The drug’s clinical benefit
- The extent to which it addresses an unmet medical need
- Its impact on Medicare beneficiaries
- Costs related to research, development, production, and distribution
This comprehensive approach ensures that negotiated prices are fair while maintaining access to life-saving medications.
What’s Next?
The changes from these drug price negotiations won’t take effect until the 2027 Annual Enrollment Period (AEP). During that time, you’ll need to monitor plan formularies to see how these negotiated drugs are listed and what impact they may have on your clients’ coverage. If you have clients who rely on these higher-cost medications, consider noting this in their files for future reference.
Additionally, it’s a good idea to review the first 10 drugs selected by CMS for price negotiation. Their reduced prices will be effective January 1, 2026, just in time for the 2026 AEP. Familiarizing yourself with these changes in advance will help you better guide your clients and stay prepared for formulary updates.
For more information and updates, visit CMS.gov and continue educating yourself to offer the best support to your clients.
Not affiliated with or endorsed by Medicare or any government agency.
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