Medicare Part D requires all major drug manufacturers to participate, but the requirement works differently than you might expect

Medicare Part D does not force drug companies to join the program. Instead, the law requires that any company selling drugs covered by Medicare must offer those drugs at a negotiated price to Part D plans. If a manufacturer refuses to negotiate, Medicare can exclude their drugs from coverage — but the company itself does not have to "participate" in Part D the way a pharmacy or insurance plan does.

What this means in practice: almost every major pharmaceutical company negotiates prices with Part D plans because the alternative — losing access to millions of Medicare patients — costs them far more than negotiating does. But participation is technically voluntary, and a small number of manufacturers have chosen not to negotiate on specific drugs.

Key Takeaways

  • Drug manufacturers are not required to join Medicare Part D, but they must negotiate prices if they want their drugs covered by Part D plans.
  • If a manufacturer refuses to negotiate, Medicare can remove that drug from Part D coverage, which means beneficiaries cannot use their Part D benefits to pay for it.
  • Nearly all major pharmaceutical companies negotiate with Part D plans because excluding their drugs from Medicare coverage would cost them billions in lost sales.
  • The drugs covered by Part D change each year as plans update their formularies based on negotiations with manufacturers.
  • You can see which manufacturers have negotiated prices for specific drugs by checking your plan's formulary or calling your plan directly.

How the negotiation requirement actually works

The Centers for Medicare & Medicaid Services (CMS) publishes a list of drugs that Part D plans can cover. For a drug to appear on that list, the manufacturer must either negotiate a price with Part D plans or accept that their drug will be excluded from Part D coverage. This is not the same as forcing a company to "participate" — it is a choice with consequences.

A manufacturer might refuse to negotiate if they believe the negotiated price would be too low, or if they are testing a new drug and want to set their own price first. When this happens, Part D beneficiaries cannot use their Part D benefits to pay for that drug at the pharmacy. The beneficiary would have to pay the full retail price out of pocket, or the manufacturer might offer a patient information program to help cover the cost.

In practice, this rarely happens with established drugs because the financial penalty is severe. A company that excludes its drug from Part D loses access to roughly 50 million Medicare beneficiaries. Most manufacturers negotiate rather than accept that loss.

Which companies actually negotiate with Part D plans

The major pharmaceutical manufacturers — including Pfizer, Merck, Johnson & Johnson, AbbVie, Eli Lilly, Bristol Myers Squibb, Moderna, Novo Nordisk, Amgen, and Regeneron — all negotiate with Part D plans. Smaller manufacturers and generic drug makers also negotiate, though sometimes on a narrower range of drugs.

The negotiation happens between the drug manufacturer and each Part D plan separately. A single drug might be covered by one plan but not another, or covered at different cost-sharing levels, depending on what each plan negotiated. This is why your Part D formulary — the list of covered drugs — is specific to your plan and changes each year.

You will not see a public list of "participating companies" because the requirement is not membership-based. Instead, you can see which drugs are covered by looking at your specific plan's formulary, which names the manufacturer of each drug and shows what you will pay.

What happens if a drug is not covered by your Part D plan

If your doctor prescribes a drug that is not on your plan's formulary, you have several options. You can ask your doctor to prescribe a different drug that is covered. You can request that your plan make an exception and cover the drug anyway — this is called a formulary exception, and plans must consider these requests. You can also switch to a different Part D plan during the annual enrollment period if another plan covers the drug you need.

If the drug is not covered by any Part D plan because the manufacturer refused to negotiate, you can pay the full retail price, look for a manufacturer information program, or ask your doctor about alternative drugs that are covered. Some manufacturers offer copay cards or patient information programs that reduce the out-of-pocket cost even when the drug is not covered by insurance.

How drug prices are negotiated for Medicare

Part D plans — the insurance companies that offer prescription drug coverage — negotiate prices directly with manufacturers. The plans want to pay as little as possible, and manufacturers want to be included in as many plans as possible. The negotiation is a back-and-forth process that happens before each plan year begins.

Starting in 2026, Medicare itself will also negotiate prices for certain high-cost drugs covered by Medicare Part B and Part D. This is a separate process from the Part D plan negotiations, and it applies only to drugs that meet specific criteria — usually older drugs with no generic or biosimilar alternatives and very high costs. The manufacturer can choose not to participate in Medicare's negotiation, but if they refuse, Medicare can remove the drug from coverage.

When drug coverage changes and how to stay informed

Part D formularies change every January 1st. Your plan might add new drugs, remove drugs, or change the cost-sharing tier for drugs you are already taking. If your current drug is removed or moved to a higher cost tier, your plan must notify you before the change takes effect. You will receive a notice in the mail, usually in October or November.

If you receive notice that your drug is no longer covered or costs more, you have the right to request a formulary exception. You can also switch to a different Part D plan during the annual enrollment period, which runs from October 15 to December 7 each year. If you switch plans, you can choose one that covers your drug at a lower cost.

You can check your plan's current formulary anytime by visiting your plan's website or calling the customer service number on your insurance card. If you are unsure whether a specific drug is covered, call your plan directly — they can tell you the exact cost-sharing amount and whether your doctor needs to get prior approval before you fill the prescription.

Frequently Asked Questions

Can a drug company refuse to sell their drug to Medicare Part D plans?

Yes, technically they can. But if they do, Medicare will not cover that drug under Part D, and beneficiaries cannot use their Part D benefits to pay for it. The financial cost of losing access to 50 million Medicare patients is so high that almost no major manufacturer does this. A few manufacturers have refused to negotiate on specific drugs, but these are rare exceptions.

If my drug is not covered by Part D, do I have to pay full price?

Not necessarily. You can ask your plan for a formulary exception, which means asking them to cover the drug even though it is not on the standard list. You can also switch to a different Part D plan that does cover it. Some manufacturers offer copay information or patient programs that reduce your cost even without insurance coverage.

Why does my drug cost more this year than last year?

Your plan may have moved the drug to a higher cost-sharing tier during the annual formulary update, or the manufacturer may have raised the price. You should receive a notice before January 1st if your drug's cost tier changes. If you did not receive notice, call your plan to ask what changed and whether you can request an exception.

Can I switch Part D plans if my drug is no longer covered?

Yes. You can switch during the annual enrollment period from October 15 to December 7. You can also switch if you experience a may have access to life event, such as moving to a new state or losing other health coverage. Use the Medicare Plan Finder tool on Medicare.gov to compare plans and see which ones cover your drug.

What is the difference between a Part D plan refusing to cover a drug and a manufacturer refusing to negotiate?

A Part D plan might not cover a drug even though the manufacturer negotiated with other plans — each plan makes its own formulary decisions. A manufacturer refusing to negotiate means no Part D plan can cover that drug. In the first case, you can switch plans. In the second case, you would need to pay out of pocket or find a manufacturer information program.