On January 17, 2025, the U.S. Department of Health and Human Services (HHS) announced the next 15 drugs selected for the Medicare Drug Price Negotiation Program. Negotiated prices will take effect January 1, 2027.
The Inflation Reduction Act (IRA) of 2022 gave the Centers for Medicare & Medicaid Services (CMS) the power to negotiate the prices of certain drugs directly with manufacturers. This program aims to help control rising drug costs and make prescriptions more affordable for Medicare beneficiaries.
CMS has already negotiated the prices of the first 10 drugs, with lower prices going into effect on January 1, 2026. Here are the 15 common prescriptions that Medicare plans to negotiate for 2027.
Which Drugs Can CMS Negotiate Prices for Starting in 2027?
As stated by CMS, between November 2023 and October 2024, about 5.3 million people with Medicare Part D coverage used the additional drugs to treat a variety of conditions, such as cancer, type 2 diabetes, and asthma. These selected drugs accounted for about $41 billion in total gross covered prescription drug costs under Medicare Part D, or about 14 percent, during that time.
Below is the list of newly negotiable drugs for 2027. Please remember that CMS may renegotiate the prices of all drugs previously named to the program or increase their prices by the annual percentage increase in the Consumer Price Index for all urban consumers.
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?
CMS must follow certain parameters when selecting drugs for the price negotiation program. Drugs eligible for negotiation must be:
- Brand-name drugs or biologics
- Part of the 50 negotiation-eligible drugs with the highest total Medicare Part D spending, except for drugs granted a Small Biotech Exception and drugs already selected during the first cycle of negotiations
- Part of the 50 negotiation-eligible drugs with the highest total Medicare Part B spending
Drugs that do not qualify for negotiation include:
- Generic drugs or those with biosimilars
- Drugs less than eight years (small-molecular drugs) or 12 years (biologics) from FDA approval or licensure date
- Certain “small biotech drugs” (from 2026 to 2028) that don’t qualify for the Small Biotech Exception
- Drugs that qualify as low-spend Medicare drugs
- Plasma-derived products
- Drugs with an orphan designation as their only FDA approval
Drug companies with a selected drug will have until February 28, 2025, to decide if they will take part in negotiations for the 15 new drugs.
Do Manufacturers Have to Participate in the Medicare Drug Price Negotiation Program?
Drug manufactures are not required to participate in the Medicare Drug Price Negotiation Program. Those that choose not to partake will be subject to a high tax on sales.
Once a drug’s price has been negotiated, manufacturers will be able to accept the deal or withdraw from the Medicare and Medicaid programs. The deadline to accept CMS’ final maximum fair price offer is October 31, 2025.
When Will Medicare Drug Price Negotiation Savings Go into Effect?
Although CMS just announced 15 additional drugs up for negotiation, beneficiaries won’t see the direct benefit until January 1, 2027. Negotiations will run through 2025, with new prices going into effect for 2027.
CMS closes the negotiation timeline well before the effective date to give drug companies the year prior to prepare for the change. The negotiation process will take time, as it considers many factors, including the drug’s clinical benefit, the extent to which it fulfills a medical need, its impact on Medicare beneficiaries, and costs associated with research, development, production, and distribution.
Negotiations will occur during 2025, with new prices going into effect for 2027.
What’s Next?
These changes won’t impact you or your clients until the 2027 AEP, when you’ll need to research and keep an eye out for how negotiated drugs show up in plan formularies. If you know that some of your clients take these more expensive drugs, you may want to make a note in their files for the future.
We also suggest refreshing your memory of the first 10 drugs that CMS negotiated. Their new prices will go into effect January 1, 2026. Educate yourself before the beginning of the 2026 AEP later so that you’re ready to go with formulary changes. Visit CMS.gov to learn more.
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