Out-of-pocket costs for the first 10 prescription drugs negotiated by Medicare are expected to fall by more than 50% on average for people enrolled in stand-alone Part D plans when the new prices take effect Jan. 1, 2026, according to a new report from AARP.

The lower prices, negotiated under the Inflation Reduction Act of 2022 (IRA), are translating into meaningful savings and broader coverage for older adults who rely on some of Medicare’s most widely used and expensive medications.

Stand-Alone Part D Plan Coverage of Negotiated Drugs in 2026

AARP

Which drugs are included in Medicare’s first round of price negotiations

The first round of negotiated drugs includes treatments for diabetes, heart disease, autoimmune disorders and certain cancers. Collectively, the medications are used by nearly nine million Medicare beneficiaries, according to AARP.

The 10 drugs are:

  • Eliquis, used to prevent and treat blood clots
  • Enbrel, used for rheumatoid arthritis, psoriasis and psoriatic arthritis
  • Entresto, used for heart failure
  • Farxiga, used for diabetes, heart failure and chronic kidney disease
  • Fiasp and NovoLog, insulin products used for diabetes
  • Imbruvica, used for certain blood cancers
  • Januvia, used for diabetes
  • Jardiance, used for diabetes, heart failure and chronic kidney disease
  • Stelara, used for psoriasis, psoriatic arthritis, Crohn’s disease and ulcerative colitis
  • Xarelto, used to prevent and treat blood clots

According to the Centers for Medicare & Medicaid Services (CMS), the first set of negotiated prices could save Medicare enrollees about $1.5 billion in out-of-pocket costs in 2026 alone.

“Medicare prescription drug negotiation is on track to deliver billions in savings for America’s seniors starting in January, making lifesaving medication more affordable,” Nancy LeaMond, executive vice president and chief advocacy and engagement officer at AARP, said in a statement.

How much Part D enrollees are expected to save

AARP’s analysis examined stand-alone Part D plans in five states with high Medicare enrollment and found that enrollee cost sharing for the 10 negotiated drugs will fall by about 50% on average between 2025 and 2026. The savings are largely driven by the way Part D cost sharing works, with coinsurance and tier placement often tied directly to a drug’s price.

What this means for Medicare Advantage plans

The findings apply specifically to stand-alone Part D plans and may not translate directly to Medicare Advantage plans that include drug coverage. While Medicare Advantage plans with Part D coverage will receive the same Medicare-negotiated drug prices, they often rely less on coinsurance than stand-alone Part D plans and are financed differently, making clean comparisons difficult, AARP said. As a result, savings for Medicare Advantage enrollees will depend in part on whether a plan uses coinsurance for a given drug and how it structures cost sharing across formulary tiers. 

“Medicare beneficiaries should see substantially lower monthly costs for these medicines in 2026,” Leigh Purvis, prescription drug policy principal at AARP and author of the report, said in a statement. “This will improve access for seniors who were previously facing high out-of-pocket costs and confirms that Medicare drug price negotiation is providing real benefits for people in the Medicare program.”

Average Reduction in Enrollee Costs for Medicare-Negotiated Drugs in 2026

AARP

Why the new Part D out-of-pocket cap still matters

In practical terms, seven of the 10 negotiated drugs are expected to cost enrollees less than $100 per month on average in 2026, compared with just two drugs at that level in 2025. Even so, AARP noted that the three most expensive medications will continue to carry relatively high monthly costs, underscoring the importance of the new Medicare Part D out-of-pocket cap.

Beginning in 2026, the IRA limits annual out-of-pocket spending for Part D prescription drugs to $2,100. The cap includes deductibles, copayments and coinsurance but does not include monthly premiums or the cost of drugs not covered by a beneficiary’s specific plan.

Why lower drug prices may not benefit every enrollee

Lower prescription costs are increasingly possible, driven by a combination of direct-to-consumer drug pricing, executive action aimed at international reference pricing, scrutiny of pharmacy benefit managers, and Medicare’s new authority to negotiate Part D prices, said Jae Oh, author of Maximize Your Medicare.

But for beneficiaries who do not take high-cost medications, the picture is more complicated. “They may face fewer consumer choices and a narrower list of medications covered by Medicare plans,” Oh said.

What the AARP analysis says about access to negotiated drugs

An AARP analysis found that access to the negotiated drugs improved alongside lower prices. While four of the drugs were not covered by every stand-alone Part D plan in 2025, all of the plans studied will cover all 10 drugs in 2026. Utilization management requirements such as prior authorization and quantity limits were largely unchanged.

Of note, in 2026, beneficiaries in each state will have a choice of between eight and 12 Medicare Part D stand-alone prescription drug plans, according to KFF.

For her part, Diane Omdahl, founder and president of 65 Incorporated, noted that beneficiaries who take a medication in the same class as a negotiated drug may want to discuss a change with their physician.

“Sometimes making a change when taking on of these costly drugs is smooth and sometimes it’s not,” she said. “So they need to consider all factors.

Beneficiaries may also need to consider changing drug plans if they want to switch to one of these drugs, Omdahl said, noting that she found two plans, for instance, that do not cover Stelara.)

“Unfortunately, it’s too late for those enrolled in Part D stand-alone plans to do that for 2026, she said.

Omdahl also noted that if a beneficiary’s plan does not cover a drug, they may want to try one on the list. “For instance, no Part D drug plan will cover Humira, a TNF inhibitor, in 2026,” she noted. “Enbrel could be a possible replacement.”

Prescription drug spending is a meaningful but uneven 

By way of background, research by Sudipto Banerjee of T. Rowe Price has shown that prescription drug spending is a meaningful but uneven part of retirees’ overall health care costs, with most Medicare beneficiaries paying relatively modest amounts out of pocket, while a smaller group faces much higher expenses.

Using data from the Health and Retirement Study, Banerjee found that for Medicare beneficiaries with prescription drug coverage, annual out-of-pocket spending on health care is highly skewed. At the median, out-of-pocket costs, which include prescription drugs, are relatively low, but costs rise sharply for those with chronic conditions or complex medical needs. 

For beneficiaries enrolled in traditional Medicare with a Part D drug plan, median out-of-pocket spending is about $800 per year, while total annual health care costs, including premiums, are roughly $4,300. Medicare Advantage enrollees with drug coverage show nearly identical median out-of-pocket spending, also around $800 annually. 

Related: AARP raises a red flag on Social Security, Medicare

At the upper end of the distribution, however, prescription drug costs contribute to substantially higher spending. At the 90th percentile, out-of-pocket costs rise to about $4,000 a year, and at the 95th percentile,/ they exceed $6,000 for both traditional Medicare with Part D and Medicare Advantage enrollees. 

Banerjee’s report also showed that health conditions are a major driver of prescription drug spending. Heart disease, lung disease, diabetes and cancer are all associated with significant increases in annual out-of-pocket costs, largely because of medication use. Heart conditions, in particular, are linked to the largest percentage increases in out-of-pocket spending. 

Overall, his study found that while most Medicare beneficiaries are able to manage prescription drug costs, a relatively small share of retirees account for a disproportionate amount of spending. That concentration helps explain why prescription drug affordability remains a top concern in retirement planning and why policy changes, such as Medicare drug price negotiation and the Part D out-of-pocket cap, can have an outsized impact for those with serious or chronic illnesses.

What comes next for Medicare drug negotiations

At present, under the IRA, additional drug prices will be negotiated in the coming years. For 2027, the Centers for Medicare & Medicaid Services (CMS) has announced lower prices for 15 high-cost medications, with savings scheduled to begin Jan. 1, 2027. The list includes widely used diabetes and weight-loss drugs such as Ozempic, Rybelsus and Wegovy; cancer treatments including Xtandi, Ibrance, Pomalyst and Calquence; respiratory medications Trelegy, Ofev and Breo; gastrointestinal drugs Linzess and Xifaxan; movement disorder treatments Austedo and Vraylar; and the psoriasis drug Otezla. 

AARP cautioned, however, that ongoing efforts to exempt additional drugs from Medicare price negotiation could undermine these gains. Exemptions would reduce the likelihood of lower cost sharing in the future and could limit access for Part D enrollees, the group said.

Read the full AARP report, Out-of-Pocket Costs Will Drop Substantially for Medicare-Negotiated Drugs.

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