The Inflation Reduction Act, signed into law in August 2022, gave Medicare the power to negotiate prescription drug prices for the first time in the program's history. After nearly two years of negotiations, the first round of negotiated prices took effect January 1, 2026, bringing significant savings to North Carolina Medicare beneficiaries.
With over 67 million Americans enrolled in Medicare—including more than 2 million North Carolinians—these drug price negotiations represent one of the most significant changes to Medicare in decades. The program aims to make expensive medications more affordable while ensuring continued access to life-saving treatments.
Medicare selected the first 10 drugs for price negotiation based on total spending and availability. These medications treat some of the most common chronic conditions affecting seniors, including diabetes, heart disease, blood clots, cancer, and autoimmune disorders.
The 10 drugs with negotiated prices for 2026:
1. Eliquis (apixaban)
• Use: Blood thinner to prevent strokes and blood clots
• Manufacturer: Bristol Myers Squibb and Pfizer
• 2023 List Price: $521 per month (30-day supply)
• 2026 Negotiated Price: $231 per month
• Discount: 56% off list price
2. Xarelto (rivaroxaban)
• Use: Blood thinner to prevent blood clots
• Manufacturer: Johnson & Johnson
• 2023 List Price: $517 per month
• 2026 Negotiated Price: $197 per month
• Discount: 62% off list price
3. Januvia (sitagliptin)
• Use: Type 2 diabetes treatment
• Manufacturer: Merck
• 2023 List Price: $527 per month
• 2026 Negotiated Price: $113 per month
• Discount: 79% off list price (largest discount)
4. Jardiance (empagliflozin)
• Use: Type 2 diabetes, heart failure, and chronic kidney disease
• Manufacturer: Boehringer Ingelheim and Eli Lilly
• Medicare spent approximately $7 billion on Jardiance (June 2022-May 2023)
5. Farxiga (dapagliflozin)
• Use: Type 2 diabetes, heart failure, and chronic kidney disease
• Manufacturer: AstraZeneca
• Medicare spent approximately $3.2 billion on Farxiga
6. Entresto (sacubitril/valsartan)
• Use: Heart failure treatment
• Manufacturer: Novartis
7. Enbrel (etanercept)
• Use: Rheumatoid arthritis, psoriasis, and other autoimmune conditions
• Manufacturer: Amgen
8. Imbruvica (ibrutinib)
• Use: Blood cancers including leukemia and lymphoma
• Manufacturer: AbbVie and Johnson & Johnson
• 2023 List Price: $14,934 per month
• 2026 Negotiated Price: $9,319 per month
• Discount: 38% off list price
9. Stelara (ustekinumab)
• Use: Psoriasis, Crohn's disease, and ulcerative colitis
• Manufacturer: Johnson & Johnson
10. Fiasp and NovoLog (insulin aspart)
• Use: Type 1 and Type 2 diabetes (fast-acting insulin)
• Manufacturer: Novo Nordisk
Together, these 10 drugs accounted for $50.5 billion (20%) of Medicare Part D spending between June 2022 and May 2023.
The negotiated prices represent discounts ranging from 38% to 79% off 2023 list prices. These savings benefit both Medicare enrollees and the overall Medicare program.
Estimated Savings for 2026:
• Medicare Program: $6 billion in annual savings
• Medicare Beneficiaries: $1.5 billion in out-of-pocket cost savings
• Approximately 9 million Medicare enrollees use these 10 drugs
Real-World Example:
In 2022, more than 3.5 million Medicare enrollees used Eliquis and paid an average of $441 out-of-pocket annually. With the negotiated price (a 56% discount), beneficiaries taking Eliquis in 2026 will see significantly lower costs.
The Inflation Reduction Act established a structured negotiation process between Medicare (through the Centers for Medicare & Medicaid Services) and pharmaceutical manufacturers.
Eligibility Criteria for Drugs:
• Must be among the highest Medicare spending drugs
• No generic or biosimilar competition available
• Small molecule drugs: at least 9 years on market
• Biologic drugs: at least 13 years on market
• Medicare spending exceeds $200 million annually
Excluded from Negotiation:
• Generic drugs and biosimilars
• Orphan drugs designated for only one rare disease
• Small biotech drugs (through 2028)
• Plasma-derived products
Factors Considered in Negotiations:
• Research and development costs
• Federal financial support for drug development
• Manufacturing and distribution costs
• Patent and exclusivity information
• Market data, revenue, and sales volume
• Clinical benefits and available alternatives
The drug price negotiation program expands each year, with more medications added to the list of negotiated drugs.
2027: 15 Additional Drugs
In January 2025, Medicare announced 15 additional Part D drugs selected for negotiation, with prices taking effect January 1, 2027. These include blockbuster diabetes drugs Ozempic and Wegovy (semaglutide), which will cost $274 per month (down from $959), and other widely-used medications for diabetes, asthma, and chronic diseases. The negotiated prices for these 15 drugs represent a 44% average discount, saving an estimated $12 billion annually.
2028: 15 More Drugs
Medicare will select 15 additional drugs from Part B or Part D for negotiation. This is the first year Part B drugs (administered by providers, such as chemotherapy and infusions) become eligible.
2029 and Beyond: 20 Drugs Annually
Starting in 2029, Medicare will negotiate prices for 20 additional drugs each year, expanding to include both Part B and Part D medications. By 2029, up to 60 drugs could have negotiated prices.
The negotiations are cumulative—once a drug has a negotiated price, it remains in the program with annual price updates.
Beyond drug price negotiations, the Inflation Reduction Act includes several other provisions that lower prescription drug costs for Medicare beneficiaries.
2025 Changes (Now in Effect):
$2,000 Annual Out-of-Pocket Cap: Starting in 2025, Medicare Part D enrollees pay no more than $2,000 out-of-pocket annually for covered prescription drugs. Once you reach this cap, you pay $0 for the rest of the year.
Free Vaccines: All adult vaccines recommended by the CDC are now available at no cost to Medicare Part D enrollees, with no deductible or copayment.
$35 Insulin Cap: Monthly insulin costs are capped at $35 for Medicare beneficiaries, regardless of the type or amount needed.
Medicare Prescription Payment Plan: Spread your Part D drug costs over monthly payments instead of paying large amounts at the pharmacy. This makes expensive medications more manageable financially.
2026 Changes (Current Year):
Negotiated Drug Prices Take Effect: The first 10 drugs now have negotiated prices, saving beneficiaries an estimated $1.5 billion in 2026.
$2,100 Out-of-Pocket Cap: The annual cap increases to $2,100 for 2026.
Inflation Penalties:
Pharmaceutical companies that raise drug prices faster than inflation must pay rebates to Medicare. This provision protects against excessive price increases and helps control costs.
While technically voluntary, the Inflation Reduction Act creates strong incentives for pharmaceutical manufacturers to participate in price negotiations.
Penalties for Non-Participation:
• Excise tax of up to 95% on the drug's U.S. sales
• Must withdraw all products from Medicare and Medicaid programs
• Civil monetary penalties for not ensuring negotiated prices are available
All manufacturers of the first 10 drugs agreed to participate in negotiations. As one Bristol Myers Squibb spokesperson stated, "We have no choice...If we did not sign, we'd be required to pay impossibly high penalties unless we withdraw all of our medicines from Medicare and Medicaid. That is not a real choice."
Several pharmaceutical companies have filed lawsuits challenging the program's constitutionality, but these legal challenges have not stopped the implementation of negotiated prices.
Medicare Part D prescription drug plans and Medicare Advantage plans with drug coverage must include all negotiated drugs in their formularies. This ensures beneficiaries have access to the lower prices.
What This Means for You:
• Your Part D plan automatically applies negotiated prices—you don't need to take any action
• Lower drug costs may reduce your copayments and coinsurance
• Savings help you reach the $2,100 out-of-pocket cap faster
• Some plans may use savings to reduce monthly premiums
Important: The negotiated price is the maximum your plan can charge. Individual plans determine how much of these savings they pass along through lower copays, coinsurance, or premiums.
Will my prescription costs automatically go down?
If you take one of the 10 negotiated drugs, your costs should decrease because the maximum price is now lower. However, your exact savings depend on your Part D plan's cost-sharing structure (copayments vs. coinsurance) and whether you've met your deductible.
Do negotiated prices apply to all Medicare beneficiaries?
Yes, all Medicare Part D enrollees—whether in standalone Part D plans or Medicare Advantage plans with drug coverage—benefit from negotiated prices.
Can drug companies still increase prices?
Negotiated prices are updated annually, but any increases are limited. Additionally, the Inflation Reduction Act requires drug manufacturers to pay rebates to Medicare if they raise prices faster than inflation.
What if I take a drug not on the negotiated list?
You'll still benefit from other Inflation Reduction Act provisions, including the $2,100 annual out-of-pocket cap, free vaccines, $35 insulin cap, and protection against excessive price increases. More drugs will be added to the negotiated list each year.
How do I know if my Part D plan has the best coverage?
Use Medicare's Plan Finder tool at Medicare.gov/plan-compare or contact a local Medicare agent to compare plans. Even with negotiated prices, different plans may have different copayments, deductibles, and premiums.
North Carolina has over 2 million Medicare beneficiaries, many of whom take the drugs included in price negotiations. These cost savings are particularly important for North Carolinians managing multiple chronic conditions.
Conditions Commonly Affecting North Carolina Seniors:
• Heart disease and blood clots (Eliquis, Xarelto, Entresto)
• Diabetes (Januvia, Jardiance, Farxiga, Fiasp/NovoLog)
• Arthritis and autoimmune diseases (Enbrel, Stelara)
• Cancer (Imbruvica)
If you're a North Carolina resident taking any of these medications, you should see lower costs when you fill prescriptions in 2026. Our local Medicare agents can help you understand how these changes affect your specific situation and ensure you're enrolled in the Part D plan that offers the best value for your medications.
Understanding how drug price negotiations affect your Medicare coverage can be complex. At Health Plans of NC, our experienced local agents specialize in helping North Carolina residents navigate Medicare Part D plans and maximize their prescription drug benefits.
How We Can Help:
• Explain how negotiated drug prices affect your out-of-pocket costs
• Compare Part D plans to find the best coverage for your medications
• Identify additional cost-saving programs you may qualify for
• Help you understand the $2,100 out-of-pocket cap and how it applies
• Provide ongoing support throughout the year
Contact Health Plans of NC today for a free consultation. Our North Carolina-based Medicare specialists will help you understand your options and find the prescription drug coverage that saves you the most money.
Health Plans of NC staff