In a recent study by the American Association of Retired Persons (AARP), it was revealed that the out-of-pocket costs for the first batch of 10 negotiated drugs by Medicare beneficiaries in 2026 are expected to decrease by almost 50%. This reflects the anticipated outcomes of the Medicare Drug Price Negotiation under the Inflation Reduction Act in the United States.
These negotiations, led by the federal Medicare program, aim to lower the prices of specific essential medications through direct negotiations with pharmaceutical companies. The goal is to alleviate the financial burden on beneficiaries, especially the elderly, and is projected to save billions of dollars for both the government and individuals, significantly reducing patients’ out-of-pocket expenses.
According to a report from the “US News” website on Thursday, this study specifically focused on the five states with the highest number of Medicare beneficiaries – California, Florida, Texas, New York, and Pennsylvania. The results indicated that these five states experienced the most significant decrease in out-of-pocket drug costs through Medicare.
The study found that the out-of-pocket costs for these drugs decreased by 50% in California, 54% in Florida, 50% in New York, 53% in Pennsylvania, and 48% in Texas. Seven of these drugs will have an average monthly cost below $100 in these five states, compared to only two drugs at this level in 2025.
However, for the three most expensive drugs – Enbrel for rheumatoid arthritis by Amgen, Imbruvica for leukemia by AbbVie, and Stelara for Crohn’s disease by Johnson & Johnson – patients will still face monthly out-of-pocket costs ranging from $600 to $2800.
The initial batch of 10 negotiated drugs includes Eliquis by Pfizer and Bristol Myers Squibb, Januvia by Merck & Co, Xarelto by Johnson & Johnson, Jardiance by Boehringer Ingelheim and Eli Lilly, insulin by Novo Nordisk, as well as Enbrel, Entresto, Farxiga, Fiasp, Novolog, Imbruvica, and Stelara.
These drugs are primarily used for treating heart disease, diabetes, autoimmune diseases, cancer, and chronic kidney disease, covered under Medicare Part D prescription drug plans. Nearly 9 million Medicare prescription drug plan enrollees use these medications, and prior to the passage of the Inflation Reduction Act in 2022, they were paying up to $6500 annually for them.
The Inflation Reduction Act, signed by former President Joe Biden, allows Medicare to directly negotiate prices for certain specific drugs for the first time. The Centers for Medicare & Medicaid Services (CMS) estimate that after the negotiated prices take effect in 2026, beneficiaries will save $1.5 billion in out-of-pocket costs.
Last month, the Trump administration announced lower Medicare prices negotiated for an additional 15 drugs, which will come into effect in 2027. The prices of drugs like Ozempic, Rybelsus, and Wegovy for type 2 diabetes and weight management will drop to around $274 from the current $959, while Tradjenta for diabetes will decrease to $78 from $488. CMS stated that this round of negotiations will save beneficiaries approximately $685 million in out-of-pocket costs.
Medicare covers over 67 million Americans aged 65 and older or with disabilities. AARP emphasizes that the reduced drug prices bring substantial relief to elderly individuals who have long struggled with high medication costs.