TL/DR –
In 2023, drugs approved for at least 7 or 11 years that had significant Medicare spending and lacked generic or biosimilar competitors were selected for Maximum Fair Prices (MFPs), which were 63% lower on average than 2023 list prices. However, these price reductions may not always result in lower costs for beneficiaries due to the role of plan benefit design in determining cost sharing. The Medicare Drug Price Negotiation Program (MDPNP) in 2026 may offer savings for beneficiaries using negotiated drugs and exposed to deductibles or coinsurance, but those with spending above the new Part D out-of-pocket cap may only see savings indirectly through decreased Medicare spending that helps contain premium increases.
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In 2023, certain drugs with substantial gross Medicare spending that had been in the market for at least 7 years (for small-molecule drugs) or 11 years (for biologics), and didn’t have any generic or biosimilar competition, were picked for price negotiations. The settled prices, called Maximum Fair Prices (MFPs), came into effect on the first day of 2026.
The settled MFPs were generally 63% less than the list prices in 2023, with the reductions ranging between 38% and 79%. Yet, it is important to consider that these reductions might not necessarily lead to lower costs for beneficiaries, as the plan benefit design decides the cost sharing structure, like whether beneficiaries should pay copayments or coinsurance. The Inflation Reduction Act (IRA) also put a cap at $2100 on the yearly out-of-pocket limit under Medicare Part D in 2026, which could potentially limit the savings from the Medicare Drug Price Negotiation Program (MDPNP).
MDPNP’s Savings in 2026
To calculate the potential savings for beneficiaries due to the MDPNP in 2026, researchers compared out-of-pocket costs before and after the implementation of the negotiated prices. They used the Medicare Formulary File from October 2025 to identify the 2026 Part D plan coverage, deductibles, and copayments or coinsurance for the negotiated drugs. The researchers also compared the 2025 point-of-sale prices from the Medicare Part D Plan Finder in November 2025 with the published MFPs for 2026.
They estimated the yearly out-of-pocket costs for 9 out of the 10 negotiated drugs, excluding insulin because the IRA had capped the monthly cost sharing for insulin at $35. Using the 2026 Part D plan coverage and cost-sharing requirements, including deductibles, they compared the average yearly out-of-pocket costs before and after the implementation of the negotiated prices for these 9 drugs. Their assessments were applicable to Medicare beneficiaries without the low-income subsidy who were subject to standard plan cost sharing.
The researchers calculated the costs separately for Medicare Advantage prescription drug plans (MA-PDs) and stand-alone Part D plans (PDPs) to take into account the differences in cost sharing between the two plan types.
Savings Vary by Drug
In 2026, most plans, including 74% of MA-PDs and 93% of PDPs, used coinsurance rather than copayments for the negotiated drugs. The researchers discovered that the maximum out-of-pocket cost in 2026, excluding premiums, was $2100, reflecting the out-of-pocket limit. Medicare beneficiaries who were taking drugs like ustekinumab, ibrutinib, and etanercept on average hit the cap, meaning they did not get additional savings under the MDPNP.
On the contrary, for people using the other 6 medications with list prices that resulted in lower-than-cap spending, MA-PD beneficiaries saved 26% to 42% across the drugs on an annual basis, while PDP beneficiaries saved approximately 33% to 49%. As a result, MA-PD beneficiaries had an average annual out-of-pocket savings of $470 (Standard Deviation, $81), and PDP beneficiaries saved on average $685 ($118) annually.
The researchers noted, “Even though the MDPNP’s negotiated prices did not lower out-of-pocket expenses for the 3 highest-priced drugs—because beneficiaries’ cost sharing still exceeded the out-of-pocket cap—lower prices reduce spending for the Medicare program overall.”
Limitations and Implications
Despite the promising findings, the researchers acknowledged several limitations of their study, including its focus only on 9 negotiated drugs. They also observed that the manufacturer pricing strategies and changes in plan benefit design could affect the calculated savings in 2026. However, they noted that their findings represent the greatest savings an average beneficiary could experience before reaching the cap.
The researchers concluded, “Beneficiaries using negotiated drugs and exposed to deductibles or coinsurance can experience savings from the MDPNP when their total out-of-pocket spending is lower than the new Part D out-of-pocket cap. For beneficiaries with spending above the cap, savings from negotiated prices could indirectly decrease Medicare spending that supports containment of premium increases.”
References
- Castle G, Huskamp HA. Out-of-pocket savings among Medicare Part D beneficiaries under the Medicare Drug Price Negotiation Program. Ann Intern Med. Published online October 12, 2026. doi:10.7326/ANNALS-26-02703
- Mattina C. CMS releases list of 10 drugs subject to price negotiation under IRA. AJMC®. August 29, 2023. Accessed October 12, 2026. https://www.ajmc.com/view/cms-releases-list-of-10-drugs-subject-to-price-negotiation-under-ira
- Halpern L. Cap on out-of-pocket insulin costs in the Inflation Reduction Act increased prescription fills. Pharmacy Times®. July 28, 2023. Accessed October 12, 2026. https://www.pharmacytimes.com/view/cap-on-out-of-pocket-insulin-costs-in-inflation-reduction-act-increased-prescription-fills
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