Medicare Drug Price Negotiations Yield Uneven Out-of-Pocket Savings

Medicare beneficiaries using lower-priced negotiated drugs experienced out-of-pocket savings under the Medicare Drug Price Negotiation Program (MDPNP), whereas those whose spending exceeded the annual out-of-pocket cap saw no direct savings, according to a research letter published today in Annals of Internal Medicine.¹

Assessing the Impact of Medicare Drug Price Negotiation

MDPNP, established under the Inflation Reduction Act (IRA), allows CMS to negotiate prices for select prescription drugs covered by Medicare. For its first year, the program targeted the following 10 drugs covered under Medicare Part D²:

• Apixaban (Eliquis; Bristol Myers Squibb)
• Empagliflozin (Jardiance; Boehringer Ingelheim)
• Rivaroxaban (Xarelto; Janssen)
• Sitagliptin (Januvia; Merck)
• Dapagliflozin (Farxiga; AstraZeneca)
• Sacubitril/valsartan (Entresto; Novartis)
• Etanercept (Enbrel; Immunex)
• Ibrutinib (Imbruvica; Pharmacyclics)
• Ustekinumab (Stelara; Janssen)
• Insulin aspart (Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill; Novo Nordisk)

In 2023, drugs with high gross Medicare spending that had been approved for at least 7 (small-molecule drugs) or 11 (biologics) years, depending on whether they were small-molecule drugs or biologics, and had no generic or biosimilar competitors were eligible for selection. The negotiated prices, known as Maximum Fair Prices (MFPs), took effect on January 1, 2026.¹

On average, MFPs were 63% lower than 2023 list prices, with reductions ranging from 38% to 79%. However, investigators noted that these reductions may not necessarily translate into lower beneficiary costs because plan benefit design determines cost sharing, including whether beneficiaries pay copayments or coinsurance. The IRA also established a $2100 annual out-of-pocket cap for Medicare Part D in 2026, which could limit potential MDPNP savings.

To estimate beneficiary savings associated with the MDPNP in 2026, researchers compared out-of-pocket costs before and after the negotiated prices took effect.

Estimating Savings Under the MDPNP

Specifically, they used the October 2025 Medicare Formulary File to identify 2026 Part D plan coverage, deductibles, and copayments or coinsurance for the negotiated drugs. To account for changes in drug prices, the researchers also compared 2025 point-of-sale prices from the Medicare Part D Plan Finder in November 2025 with the 2026 published MFPs.

They calculated annual out-of-pocket costs for 9 of the 10 negotiated drugs, excluding insulin because the IRA caps monthly cost sharing for insulin at $35.³ For these 9 drugs, the researchers compared average annual out-of-pocket costs before and after negotiated prices took effect, using 2026 Part D plan coverage and cost-sharing requirements, including deductibles.¹ They noted that their estimates applied to Medicare beneficiaries without the low-income subsidy who were subject to standard plan cost sharing.

The researchers estimated costs separately for Medicare Advantage prescription drug plans (MA-PDs) and stand-alone Part D plans (PDPs) to account for differences in cost sharing between the 2 plan types.

Out-of-Pocket Savings Vary by Drug

Most plans in 2026, specifically 74% of MA-PDs and 93% of PDPs, used coinsurance rather than copayments for negotiated drugs. The maximum out-of-pocket cost in 2026, excluding premiums, was $2100, the researchers found, reflecting the out-of-pocket limit. Medicare beneficiaries taking ustekinumab, ibrutinib, and etanercept reached the cap on average, meaning they did not receive additional savings under the MDPNP.

By contrast, among those using the other 6 medications with list prices that would result in lower-than-cap spending, MA-PD beneficiaries saved an estimated 26% to 42% across the drugs annually, and PDP beneficiaries saved approximately 33% to 49%. Therefore, MA-PD beneficiaries had an average annual out-of-pocket savings of $470 (SD, $81), and PDP beneficiaries saved an average of $685 ($118) annually.

“Although the MDPNP’s negotiated prices did not decrease patients’ out-of-pocket spending for the 3 highest-priced drugs—because beneficiaries’ cost sharing continued to exceed the out-of-pocket cap—lower prices reduce spending for the Medicare program overall,” the authors wrote.

Study Limitations and Broader Cost Implications

The researchers acknowledged several study limitations, including its focus on only 9 negotiated drugs. They also noted that manufacturer pricing strategies and changes in plan benefit design could affect estimated savings in 2026. Despite these limitations, the authors noted that their findings represent the greatest savings an average beneficiary could experience before reaching the cap.

“Beneficiaries using negotiated drugs and exposed to deductibles or coinsurance can experience savings from the MDPNP when their total out-of-pocket spending is lower than the new Part D out-of-pocket cap,” the authors concluded. “For beneficiaries with spending above the cap, savings from negotiated prices could indirectly decrease Medicare spending that supports containment of premium increases.”

References

1. Castle G, Huskamp HA. Out-of-pocket savings among Medicare Part D beneficiaries under the Medicare Drug Price Negotiation Program. Ann Intern Med. Published online October 12, 2026. doi:10.7326/ANNALS-26-02703
2. Mattina C. CMS releases list of 10 drugs subject to price negotiation under IRA. AJMC^®. August 29, 2023. Accessed October 12, 2026. https://www.ajmc.com/view/cms-releases-list-of-10-drugs-subject-to-price-negotiation-under-ira
3. Halpern L. Cap on out-of-pocket insulin costs in the Inflation Reduction Act increased prescription fills. Pharmacy Times^®. July 28, 2023. Accessed October 12, 2026. https://www.pharmacytimes.com/view/cap-on-out-of-pocket-insulin-costs-in-inflation-reduction-act-increased-prescription-fills