Medicare Unveils First Negotiated Prices for 10 of the Costliest Medications

The 10 selected drugs accounted for more than $56 billion in Part D spending in 2023, according to HHS, and people with Medicare prescription drug coverage taking these 10 medications paid a total of $3.4 billion in out-of-pocket costs in 2022.

“Today’s announcement marks a significant step forward in our long-standing efforts to lower prescription drug prices,” says Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer. “AARP members from across the political spectrum overwhelmingly called lowering prescription drug costs a top concern — and this first round of Medicare-negotiated prices will bring financial relief to millions of older Americans.”

Many older Americans struggle to afford medication

A 2023 survey from AARP shows that 60 percent of older adults are very or somewhat concerned about being able to afford the prescription medication that they or someone in their family needs, and HHS reports that more than 5 million Medicare enrollees face challenges when it comes to affording their prescription medications.

This can have dangerous consequences. A 2023 poll from the health policy nonprofit KFF found that about 30 percent of adults don’t take their medications as prescribed due to high costs.  

Several polls, including research conducted by AARP, have found overwhelming public support for price negotiations between the federal government and drug makers. 

Barbara Fabyan’s 73-year-old husband takes three medications whose prices were negotiated by Medicare. Before he started taking these and other drugs, the couple never hit Medicare Part D’s coverage gap — a temporary limit on what the prescription drug plan will cover for a person’s medications.  

But in 2023, they reached the gap in March and noticed a significant jump in how much they paid out of pocket when they filled their prescriptions. “Talk about a sticker shock at the pharmacy,” says Fabyan, a retired educator near Fort Wayne, Indiana.

This year, they hit that gap even quicker. “It certainly affects our savings, because that’s what we draw from to pay those extra medicine costs,” she says. “Some of the things like going out to eat, things like that, we just don’t do as much.”

The coverage gap will be eliminated in 2025, under the AARP-backed prescription drug law, and people with a Medicare prescription drug plan will start to benefit from a new limit on out-of-pocket expenses for their prescription medications. (This limit will be $2,000 in 2025.)

“As the voice for the 100 million Americans ages 50-plus, we will continue working to ensure this law is fully implemented and benefits older Americans for decades to come,” AARP’s LeaMond said.

More drug negotiations on the horizon

These first 10 medications are just the beginning for Medicare prescription drug price negotiations. Under the law, CMS will select and negotiate the prices of 15 more drugs for 2027, another 15 for 2028 and 20 additional drugs each year after that. The nonpartisan Congressional Budget Office has estimated that these negotiations will not only benefit consumers but will save the Medicare program $98.5 billion over 10 years.

Other provisions in the AARP-backed prescription drug law are also helping to make medications more affordable to older adults with Medicare. For example, a $35 monthly copay cap for insulin took effect in 2023 for people with Medicare prescription drug plans, and coinsurance amounts have been lowered for certain medications whose prices have been rising faster than the rate of inflation.

Many lifesaving vaccines have been made free for people in Medicare prescription drug plans, and importantly, a new annual cap on out-of-pocket expenses for prescription medications will take effect Jan. 1, 2025 (the cap will be $2,000 in 2025), offering much-needed savings and peace of mind for older adults with high drug expenses.  

 “Older adults have been struggling with high prescription drug prices for too long. The announcement of the first Medicare-negotiated drug prices is just the latest evidence of how the 2022 prescription drug law is creating much-needed savings for Medicare beneficiaries, as well as the Medicare program and the taxpayers who fund it,” AARP’s Purvis says.

Key dates for price negotiations

• By Feb. 1, 2025: CMS will announce up to 15 drugs covered under Part D subject to negotiations for prices that will become effective in 2027.
• March 1, 2025: deadline for CMS to publish the explanation of the maximum fair prices that have been negotiated for the first 10 drugs selected for negotiation for 2026.
• By Nov. 30, 2025: CMS will announce the maximum fair prices for the 15 drugs selected in February 2025.
• Jan. 1, 2026: Maximum fair prices negotiated for first 10 selected drugs become effective.
• 2027: Negotiated prices for 15 additional drugs take effect.
• 2028: Negotiated prices for another 15 drugs take effect.
• 2029 and beyond: Negotiated prices for 20 additional drugs per year take effect.

AARP officials Nancy LeaMond, executive vice president and chief advocacy and engagement officer; Leigh Purvis, prescription drug policy principal; Bill Sweeney, senior vice president for government affairs; and Megan O’Reilly, vice president for health and family, attend a White House event in 2023 to celebrate the release of the first 10 Medicare drugs whose prices will be negotiated.

Rhett Buttle