First Medicare Negotiated Drug Prices Took Effect on 1 January 2026

The Inflation Reduction Act, signed in August 2022, required the Centers for Medicare & Medicaid Services (CMS) to negotiate prices directly with manufacturers for selected high-expenditure Medicare drugs. The negotiated prices are called maximum fair prices in the statute and in CMS materials. The first negotiation cycle covered ten drugs payable under Medicare Part D, and the negotiation period ended on 1 August 2024 with agreement reached on all ten.

CMS announced the results on 15 August 2024. It reported that the negotiated prices represented discounts ranging from 38% to 79% off the manufacturers’ 2023 list prices for a 30-day supply. CMS estimated that, had the prices been in effect in the previous year, Medicare would have saved about 6 billion US dollars, or roughly 22%, and that enrollees would save an estimated 1.5 billion US dollars in out-of-pocket costs in 2026. These prices took effect on 1 January 2026, the first year in which negotiated prices applied in practice.

The second cycle covered 15 further Part D drugs, including the semaglutide products Ozempic, Wegovy and Rybelsus. CMS announced in November 2025 that it had reached agreement with the participating manufacturers on all 15 drugs, and those prices take effect on 1 January 2027. CMS estimated savings of about 12 billion US dollars relative to the existing net prices for these drugs in 2024.

On 27 January 2026, CMS announced the third cycle. It selected 15 drugs, including for the first time drugs payable under Medicare Part B, which are mainly physician-administered medicines. CMS also selected one previously negotiated drug, Tradjenta, for the programme’s first renegotiation. CMS reported that all manufacturers of the selected drugs chose to participate. Negotiations take place during 2026, CMS must publish the negotiated and renegotiated prices by 30 November 2026, and those prices take effect on 1 January 2028. At the time of checking, the third-cycle prices had not yet been published.

From later cycles onwards the statute allows up to 20 drugs a year to be selected across Part B and Part D, so the number of drugs with negotiated prices will continue to grow.

The original law excluded drugs approved for a single rare disease. The One Big Beautiful Bill Act, signed on 4 July 2025, broadened this exclusion. A drug with two or more orphan designations or approvals can now remain excluded from negotiation provided it has no non-orphan approval. For drugs that later lose the exclusion, the period that determines negotiation eligibility now begins on the day after the first non-orphan approval, rather than the date of first approval that CMS had previously used.

The Congressional Budget Office revised its estimate of the cost of this change to 8.8 billion US dollars over ten years. CMS began implementing the changes in final guidance issued in September 2025. Commentators remain divided over whether the broader exemption is justified.

For manufacturers, the negotiation programme is now a fixed part of US lifecycle planning. Teams need to track when a product may become eligible for selection, which depends on the time since approval and on Medicare expenditure, and to assess how the orphan exclusion applies to their indication strategy. Companies with selected drugs must prepare data submissions for CMS, take part in the negotiation process and put in place arrangements so that the maximum fair price is available to dispensers and patients from the effective date.

The extension to Part B from the third cycle brings physician-administered products, including some oncology and immunology medicines, into scope for the first time. Health economics and outcomes research teams should expect clinical benefit, unmet need and therapeutic alternatives to feature in negotiations, and should maintain an evidence base that compares their product with available treatments in the Medicare population.

Medical writers and publication teams also have a role. The evidence that a manufacturer presents to CMS, and the information CMS considers on therapeutic alternatives and unmet need, draws on the published literature, clinical guidelines and outcomes data. Keeping publications, value dossiers and real-world evidence up to date for products that may be selected in future cycles helps ensure that a product’s clinical profile is accurately represented when negotiations begin. Because the programme’s guidance and timelines are set cycle by cycle, teams should also review each new CMS guidance document for changes in process, data requirements and deadlines.