Medicare Drug Price Negotiation Program Gets Final Guidance For Second Cycle, $1.5B Savings Expected

On Wednesday, the U.S. Department of Health and Human Services (HHS), working via the Centers for Medicare & Medicaid Services (CMS), released final guidance for the second cycle of the Medicare Drug Price Negotiation Program.

This initiative aims to provide lower drug prices starting in 2026 and 2027.

It also ensures that people with Medicare can access these negotiated prices, expanding on the groundwork laid in the first cycle of negotiations.

The first round of negotiations focused on 10 specific drugs. Medicare recipients should save approximately $1.5 billion in out-of-pocket costs when the new prices take effect in 2026.

By February 2025, CMS will select up to 15 additional drugs for the second round of negotiations. The selected drugs will undergo negotiations in 2025, with new prices becoming effective in 2027.

They include: 

• Novo Nordisk‘s NVO diabetes drug, Ozempic,
• Pfizer Inc.’s PFE cancer drugs Ibrance and Xtandi
• GSK Plc’s GSK asthma treatment Trelegy Ellipta
• Teva Pharmaceutical Industries Ltd.’s TEVA Huntington’s disease drug Austedo, and
• Abbvie Inc.’s ABBV irritable bowel syndrome treatment Linzess.

CMS plans to improve patient-focused engagement during the second cycle of negotiations. It will also organize roundtable events and town hall meetings in 2025.

As Medicare Open Enrollment approaches on Oct. 15, beneficiaries can expect more cost-saving measures in the coming years. That includes a $2,000 annual cap on out-of-pocket drug costs starting in January 2025.

These changes build on other provisions of the Inflation Reduction Act, which was signed by President Joe Biden on Aug. 16, 2022. The legislation included a $35 monthly cap on insulin and free recommended vaccines for adults covered under Medicare Part D.

Monday, the U.S. Department of Health and Human Services (HHS) announced that Medicare enrollees will benefit from reduced prices on 54 drugs through Medicare Part B, effective from Oct. 1, 2024, to Dec. 31, 2024. Some Medicare beneficiaries could see daily savings ranging from $1 to as much as $3,854 on drugs included in the rebate program.

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