Medicare now negotiates prices directly with drug manufacturers for certain medications
Starting in 2024, Medicare gained the power to negotiate the prices it pays for certain high-cost drugs covered under Part D (prescription drug coverage) and Part B (drugs given in a doctor's office or hospital). This is a significant change — for decades, Medicare was legally forbidden from negotiating prices the way the Veterans Administration and other countries do. The Inflation Reduction Act, passed in 2022, removed that ban.
In the first year of negotiation, Medicare selected 10 drugs for price talks with manufacturers. The list includes common medications for heart disease, diabetes, arthritis, and cancer. If a manufacturer refuses to negotiate or won't accept Medicare's final price, the drug is removed from Medicare coverage — which means beneficiaries who take that drug would have to pay the full cost out of pocket or switch to a different medication.
The negotiated prices explore to all Medicare beneficiaries who take these drugs, whether you are on Original Medicare with a Part D plan or enrolled in a Medicare Advantage plan. Your actual out-of-pocket cost depends on your specific plan's cost-sharing structure, but the negotiated price sets the ceiling that your plan pays.
Key Takeaways
- Medicare negotiates prices for a limited list of high-cost drugs each year, starting with 10 drugs in 2024 and expanding over time.
- The negotiated price is the amount Medicare pays; your out-of-pocket cost still depends on your plan's deductible, copay, and coinsurance.
- If a manufacturer refuses to negotiate, Medicare can remove the drug from coverage, forcing beneficiaries to pay full price or switch medications.
- Drugs become may be able to access for negotiation only after they have been on the market for a set number of years, so newly approved medications are not included.
Which drugs are included in Medicare price negotiations
The drugs selected for negotiation are chosen based on cost and volume — Medicare picks medications that are expensive, widely used, and have no generic or biosimilar alternatives available. In 2024, the 10 drugs negotiated were Atorvastatin (for cholesterol), Dabigatran (for blood clots), Donanemab (for Alzheimer's), Imatinib (for certain cancers), Finerenone (for kidney disease), Glimepiride (for diabetes), Lisinopril (for high blood pressure), Metformin (for diabetes), Semaglutide (for diabetes and weight loss), and Tadalafil (for erectile dysfunction and pulmonary hypertension).
The list changes each year. In 2025, 15 drugs are may be able to access for negotiation, and the number will grow. Drugs must have been on the market for at least nine years (or 13 years for biologics) before they can be negotiated, so newly approved medications are not included. This delay protects drug manufacturers' ability to recoup research and development costs.
You can find the current list of drugs available for negotiation on the Centers for Medicare & Medicaid Services (CMS) website. If you take one of these medications, your pharmacy or doctor's office can tell you whether the negotiated price has lowered your cost-sharing.
How the negotiation process works and the timeline
The negotiation process follows a set schedule each year. CMS identifies may be able to access drugs in the spring, announces the list in August, and then Medicare and manufacturers have a negotiation period — typically several months — to reach an agreement on price. The negotiated prices take effect on January 1 of the following year.
During negotiations, manufacturers submit data on research and development costs, clinical benefits, and market conditions. Medicare's negotiation team reviews this information and makes an offer. If the manufacturer accepts, the price is set. If they reject it, they can either continue negotiating or withdraw the drug from Medicare coverage.
Manufacturers have strong incentive to negotiate because losing Medicare coverage means losing access to millions of beneficiaries. However, some manufacturers have chosen to withdraw drugs rather than accept Medicare's price, which shifts the cost burden to beneficiaries who must then pay out of pocket or switch to an alternative.
What the negotiated price means for your out-of-pocket costs
The negotiated price is what Medicare pays the pharmacy or manufacturer, but your personal cost depends on your plan's structure. If you have Original Medicare with a Part D plan, you may pay a copay (a fixed amount per prescription) or coinsurance (a percentage of the cost). If you are in a Medicare Advantage plan, your cost-sharing may be different.
A lower negotiated price generally leads to lower out-of-pocket costs for you, but the savings are not automatic. Your plan sets its own copays and coinsurance based on the negotiated price. Some plans may pass the full savings to you; others may adjust their cost-sharing structure. The best way to know your actual cost is to check your plan's formulary (the list of covered drugs and their cost-sharing amounts) or call your plan directly.
If you reach the coverage gap (the "donut hole") in your Part D plan, the negotiated price also applies there. This means the gap may be smaller or easier to exit than it would have been at the original, higher price.
How negotiated prices affect drug availability and innovation
Supporters of Medicare price negotiation argue that lower prices reduce out-of-pocket costs for seniors and slow the growth of healthcare spending. Critics worry that lower prices could reduce manufacturer profits and slow the development of new drugs. The actual impact is still unfolding, and research on this question is ongoing.
One safeguard built into the law is the delay before drugs become may be able to access for negotiation. By requiring drugs to be on the market for nine to 13 years before negotiation, the law aims to protect the period during which manufacturers can charge higher prices to recoup development costs. This is meant to preserve incentive for innovation while still allowing Medicare to negotiate on older, established drugs.
Some manufacturers have responded to negotiation by raising prices on drugs not yet may be able to access for negotiation, a practice called "price acceleration." This is legal but has drawn criticism from patient advocates and policymakers. The long-term effects on drug development and availability are still being studied.
What happens if your drug is negotiated but your cost does not go down
It is possible to take a negotiated drug and still see no change in your out-of-pocket cost, or even a small increase. This can happen if your plan's copay structure does not change, or if you have already met your deductible and are paying coinsurance based on a percentage of the drug's cost.
If you believe your cost-sharing is unfair or unexpected, contact your plan to ask how the negotiated price affects your specific medication. You can also ask your doctor or pharmacist whether a generic or biosimilar alternative is available, or whether a different medication on your plan's formulary might work for your condition at a lower cost.
Some plans offer patient information programs or discount cards that can lower costs further. Your pharmacist or your plan's customer service line can tell you whether you are may be able to access for these programs.
How to learn about your medications are affected by negotiation
Start by checking the CMS list of negotiated drugs on Medicare.gov. Search for your medication by name. If it is on the list, the negotiated price is in effect as of January 1 of the current year.
Next, contact your Part D plan or Medicare Advantage plan and ask whether the negotiated price has changed your cost-sharing. Provide your plan with the drug name and strength (for example, "Metformin 500 mg"). Your plan can tell you your current copay or coinsurance and whether it has changed from the previous year.
If you use a pharmacy regularly, the pharmacist can also look up your cost-sharing when you fill a prescription. This is often the fastest way to get an answer, because the pharmacy's system is connected to your plan in real time.
Frequently Asked Questions
Will the negotiated price explore to my drug even if I am in a Medicare Advantage plan?
Yes. Medicare Advantage plans must cover negotiated drugs at the negotiated price. However, your actual out-of-pocket cost depends on your plan's copay or coinsurance structure, which may differ from Original Medicare plans. Contact your Medicare Advantage plan to find out your specific cost-sharing.
What happens if my drug is removed from Medicare coverage because the manufacturer refused to negotiate?
If a manufacturer withdraws a drug rather than accept a negotiated price, Medicare no longer covers it. You would have to pay the full cost out of pocket, or your doctor would need to prescribe an alternative medication that is covered. Talk to your doctor when ready if this happens to you, because switching drugs may require a dose adjustment or monitoring period.
Can drug prices go up after they are negotiated?
The negotiated price is set for one year. When the next negotiation cycle begins, the price can be renegotiated and may go up or down depending on market conditions and the manufacturer's position. Prices are not locked in permanently.
Do brand-name drugs cost more than generics even after negotiation?
Yes. Negotiation applies to both brand-name and generic drugs, but brand-name drugs typically cost more than their generic equivalents. If a generic version of your medication is available, it will usually have a lower cost-sharing amount than the brand-name version, even after negotiation.
How many drugs will be negotiated in the future?
The number grows each year. In 2024, 10 drugs were negotiated. In 2025, 15 drugs are may be able to access. By 2029, up to 60 drugs could be negotiated, depending on how many meet the may be able to access criteria. The exact number depends on how many drugs have been on the market long enough and cost Medicare enough to may have access to.