Medicare officials announced the selection of 15 additional prescription drugs for price negotiations under the Inflation Reduction Act, marking the second cycle of a program designed to reduce medication costs for seniors and people with disabilities. The new negotiated prices will take effect January 1, 2027.
The selected medications include widely prescribed treatments for diabetes, cancer, asthma, and other chronic conditions. Between November 2023 and October 2024, these 15 drugs accounted for approximately $41 billion in total covered prescription drug costs under Medicare Part D, representing about 14% of the program's prescription drug spending.
Second-Cycle Drug Selection
The 15 drugs selected for the second round of negotiations include several high-profile medications:
Diabetes and Weight Management:
- Ozempic, Rybelsus, and Wegovy (semaglutide formulations)
Respiratory Conditions:
- Trelegy Ellipta and Breo Ellipta (asthma and COPD treatments)
Cancer Treatments:
- Xtandi (prostate cancer)
- Pomalyst (multiple myeloma)
- Ibrance (breast cancer)
- Calquence (blood cancers)
Other Therapeutic Areas:
- Ofev (idiopathic pulmonary fibrosis)
- Linzess (irritable bowel syndrome)
- Austedo and Austedo XR (Huntington's disease)
- Tradjenta and Janumet/Janumet XR (diabetes)
- Xifaxan (hepatic encephalopathy)
- Vraylar (bipolar disorder and schizophrenia)
- Otezla (psoriatic arthritis)
Building on First-Cycle Success
The announcement follows the completion of Medicare's first drug price negotiation cycle, which targeted 10 high-cost medications. Those negotiations resulted in price reductions ranging from 38% to 79%, with the new prices scheduled to take effect in 2026. The first-cycle negotiations are projected to generate approximately $6 billion in annual savings for Medicare and $1.5 billion for Medicare enrollees.
"Today's announcement is pivotal -- the Inflation Reduction Act is lowering prices for people on Medicare," said Xavier Becerra, HHS Secretary under the Biden administration. "HHS will continue negotiating in the best interest of people with Medicare to have access to innovative, life-saving treatments at lower costs."
Program Expansion and Impact
The Medicare Drug Price Negotiation Program represents a significant shift in how the federal government approaches prescription drug costs. The 25 drugs across both the first and second negotiation cycles account for approximately one-third of Medicare's total prescription drug spending, underscoring the program's potential impact on healthcare costs.
Chiquita Brooks-LaSure, administrator of the Centers for Medicare & Medicaid Services, emphasized the program's long-term significance: "Improving prescription drug affordability for Medicare enrollees is the core of the Inflation Reduction Act, and the next cycle of negotiations will continue to strengthen Medicare for generations to come."
Coverage Considerations for Weight-Loss Medications
The inclusion of Ozempic and Wegovy in the negotiation list highlights ongoing policy discussions about Medicare coverage for weight-loss treatments. Currently, federal law prohibits Medicare from covering medications specifically for obesity treatment. Medicare will only cover these semaglutide-based drugs when prescribed for diabetes management or blood sugar control.
A proposal from the Biden Administration to extend Medicare coverage for these medications when used for weight loss remains under consideration by the Trump Administration.
Industry Response and Future Cycles
Pharmaceutical manufacturers and their trade associations continue to challenge the negotiation program through court proceedings, though these efforts have not been successful to date. Industry groups are expected to pursue additional challenges through the Trump administration and Congress.
Despite ongoing legal challenges, CMS is proceeding with the second cycle of negotiations. The program is structured to include four total cycles, with plans to negotiate prices for 15 additional drugs in the third cycle and up to 20 more in subsequent years.
The negotiation process will conclude with the establishment of maximum fair prices for the 15 selected drugs, which will become effective on January 1, 2027, providing Medicare beneficiaries with reduced out-of-pocket costs for these essential medications.
