The second round of Inflation Reduction Act negotiation prices, which includes 15 brand-name drugs, will kick into effect in 2027.
The Trump administration on Tuesday announced $12 billion in federal savings from the second year of Medicare drug price negotiations — a total health officials assert roughly doubles what President Joe Biden secured in the inaugural year of his signature drug pricing law.
The agreed-upon prices will take effect starting in 2027 for 15 drugs, saving people with Medicare prescription drug coverage an estimated $685 million in out-of-pocket costs. The medications were used by about 5.3 million Medicare beneficiaries last year.
They include Pfizer’s breast cancer therapy Ibrance, which was used by 16,000 Medicare Part D beneficiaries in 2024, and Boehringer Ingelheim’s lung fibrosis treatment Ofev, which was used by 24,000 people. The government reached a 50 percent discount on both of those drugs compared to their 2024 list prices.
Notably, Novo Nordisk’s drugs for diabetes and weight loss were also part of the negotiations, which yielded a negotiated price of $274 for Ozempic and Rybelsus and $385 for Wegovy for a 30-day supply for conditions covered by Medicare — a 71 percent discount from the 2024 list price. Nearly 2.3 million Medicare beneficiaries with prescription drug coverage took those drugs last year.
That appears to be a higher number than the price President Donald Trump achieved earlier this month through a most-favored nations deal with Novo Nordisk and Eli Lilly for their weight-loss drugs, which also impacts Medicare beneficiaries. However, it is unclear how the two programs will interact with each other.
“President Trump directed us to stop at nothing to lower health care costs for the American people,” HHS Secretary Robert F. Kennedy Jr. said in a statement. “As we work to Make America Healthy Again, we will use every tool at our disposal to deliver affordable health care to seniors.”
The key factor in the second round of price negotiations was the administration’s willingness to walk away from the table if they didn’t reach a deal, said Chris Klomp, deputy administrator of the Centers for Medicare and Medicaid Services, which handled the talks.
Without an agreement, under the Inflation Reduction Act a pharmaceutical manufacturer would likely need to withdraw its drugs from the Medicare and Medicaid programs — thereby losing access to programs that cover nearly 150 million Americans — or be punished with a high excise tax.
“A true negotiation implies that you might not reach a negotiated outcome,” Klomp said. The Trump health care official noted that the government must balance pushing for lower prices while keeping drugmakers in the program so beneficiaries can access the medicines they need. They also need to keep prices high enough that manufacturers have adequate funds to research and develop new drugs.
Still, negotiators — the same career CMS staff that handled last year’s talks — reached agreements with the manufacturers of all 15 new drugs up for Medicare price negotiations.
The other negotiated products are asthma treatment Trelegy Ellipta; prostate cancer medicine Xtandi; multiple myeloma drug Pomalyst; irritable bowel syndrome treatment Linzess; leukemia drug Calquence and Huntington’s disease chorea drugs Austedo and Austedo XR. They also include asthma treatment Breo Ellipta; irritable bowel syndrome medicine Xifaxan; bipolar and schizophrenia drug Vraylar; Type 2 diabetes drugs Tradjenta and Janumet and Janumet XR and plaque psoriasis and psoriatic arthritis treatment Otezla and Otezla XR.
A spokesperson for the Pharmaceutical Research and Manufacturers of America slammed what he described as policies that siphon money that could be used for research.
“Whether it is the IRA or MFN, government price setting for medicines is the wrong policy for America,” Alex Schriver said in a statement.
But Merith Basey, executive director of patient advocacy group Patients For Affordable Drugs, argued the savings represent a victory for patients and taxpayers.
“Patients fought hard for these reforms, and Americans overwhelmingly support expanding the program — including to the millions of patients in the commercial market still awaiting relief,” Basey said in a statement.
House Energy and Commerce Committee ranking member Frank Pallone (D-N.J.) hailed the negotiated prices, saying they would result in real savings for Medicare and fair prices for patients.
“I am pleased to see the negotiated prices released today, and that this Administration has fulfilled the mandate of the Inflation Reduction Act that Democrats passed in 2022 without a single Republican vote,” Pallone said.
Shortly before leaving office, CMS under Biden said its first round of drug price talks would have cut Medicare spending on the initial 10 drugs by roughly $6 billion if the new 2026 prices achieved in the first cycle had been applied in 2023.
The Trump administration says the $12 billion in savings — a 44 percent reduction that reflects the spending difference if the 2027 prices were applied in 2024 — is an apples-to-apples comparison to the $6 billion in savings in the first year of the program. But health officials argue a better methodology shows the second cycle achieved a true net of about $8 billion, or 36 percent, in savings.
That’s because the Inflation Reduction Act also included an overhaul of the design of the Medicare Part D program.
Health policy experts had predicted that the second round of price talks would result in a higher number of savings for several reasons. More drugs were up for negotiation in the second year of the Inflation Reduction Act program, and several of the 15 are pricey cancer drugs that are believed to have smaller rebates than other medicines, which could allow CMS more room to extract deeper discounts.
In the months leading up to the price talks, liberals including Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.) and Ron Wyden (D-Ore.) urged the Trump administration to aggressively defend the Medicare drug price negotiations in court from numerous legal challenges and avoid pausing the implementation of the Inflation Reduction Act program.
The Trump administration appears to have heeded those calls.
It has continued to defend the drug price negotiations in court, where drugmakers have suffered a series of high-profile losses across multiple jurisdictions where they have filed lawsuits against the program. And while Republicans may dislike the Inflation Reduction Act’s design, CMS has pressed forward with Medicare drug price negotiations.
“If we’re going to negotiate, we’re going to do our job, and we take seriously the fact that we’ve been charged to be wise stewards of program dollars and to ensure longevity of the program, while also driving affordability for our beneficiaries,” Klomp said.