Medicare Drug Prices Are Changing: What to Know

Medicare is releasing its new drug prices for 2026, and many of the costliest prescriptions are set to be lowered for Americans who rely on the government health insurance.

President Joe Biden has approved deals with drug companies to lower the costs of 10 of Medicare’s most common and expensive drugs, but the new prices aren’t likely to be released until Thursday afternoon.

The Biden administration said that the new prices would save taxpayers about $6 billion, while the seniors on Medicare could save $1.5 billion on their prescriptions.

“For years, millions of Americans were forced to choose between paying for medications or putting food on the table, while Big Pharma blocked Medicare from being able to negotiate prices on behalf of seniors and people with disabilities. But we fought back—and won,” Biden said in a statement.

“Today, for the first time in history, my Administration is announcing that Medicare has reached agreements on new, lower prices with the manufacturers of all 10 drugs selected for the first round of drug price negotiation.”

The affected medications include those Americans use to manage diabetes, cancer and heart disease, which affect millions each year.

Altogether, more than 67 million Americans rely on Medicare for their health coverage, but high drug prices and premiums have made health care unaffordable for many.

“It’s a relief for the millions of seniors that take these drugs to treat everything from heart failure, blood clots, diabetes, arthritis, Crohn’s disease, and more—and it’s a relief for American taxpayers,” Biden said.

Medicare previously said blood thinners Xarelto and Eliquis would see lower prices because of the new deals, alongside diabetes medications Jardiance and Januvia.

Previously, the U.S. government was not permitted to negotiate with Big Pharma over drug prices, though private insurers always had this ability.

“This meant that drug companies could basically charge whatever they want for lifesaving treatments people rely on, and all Americans paid the price,” White House adviser Neera Tanden said in a media call on Wednesday evening.

Pharmaceutical companies have not been pleased with Biden’s price negotiations and pushed against the Inflation Reduction Act, which made the negotiations law.

While the first 10 selected drug prices aren’t set to change until 2026, the U.S. government can pick another 15 medications to negotiate on next year.

The Congressional Budget Office estimated that the negotiations would save the government $25 billion in the next seven years.

The Inflation Reduction Act also instituted a cap on out-of-pocket drug costs, which is set to start in 2025. Next year, seniors can expect to pay a maximum of $2,000 for their prescriptions.

“As a result of the Inflation Reduction Act, Medicare Part D has become a stronger safety net for Medicare beneficiaries who need expensive medications,” Louise Norris, a health policy analyst for medicareresources.org, told Newsweek. “This will provide significant financial relief to enrollees who used to spend far more than that for their medications.”

With the lower costs on prescriptions, there is some concern that those costs could be passed on to Medicare premium prices. Likely in an effort to mitigate some of those issues, the Centers for Medicare and Medicaid Services is paying an extra $15 per member per month to insurers.

“Some Republican lawmakers are challenging the premium stabilization program, alleging that it should have required congressional approval,” Norris said. “But the implementation of this program should ensure that people with Medicare Part D continue to have multiple affordable options for 2025.”

Open enrollment for Medicare begins October 15 and runs to December 7, with all plan selections taking effect in January.

“It’s a big win for Medicare recipients. One of the concerns going into these negotiations was that a deal wouldn’t be reached, and a few of these drugs wouldn’t have the same amount of coverage many need,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

“Even if you don’t use one of the drugs covered, it’s an encouraging sign,” he added. “With an increasing older population in America, more taxpayers are going to join Medicare in the coming years. The government taking a more proactive approach to negotiations to cover drug prices is one current and future recipients will be thankful for.”