Medicare's Negotiated Drug Prices Save $12 Billion for Seniors and Taxpayers

Last week, the Centers for Medicare & Medicaid Services (CMS) announced a net savings of 44 percent, or $12 billion, from last year’s negotiated Medicare spending on 15 drugs widely used to treat cancer and other severe chronic conditions. 

According to a press release, the Maximum Fair Prices (MFPs) for these 15 drugs will go into effect on January 1, 2027, bringing the total number of negotiated drugs to 25 when combined with the 10 drugs negotiated earlier, with MFPs taking effect on January 1, 2026. The 15 drugs in this second negotiation cycle, used to treat cancer, diabetes, asthma, and other chronic illnesses, are among the highest Medicare Part D expenditures.

Between January 1, 2024, and December 31, 2024, approximately 5.3 million people with Medicare Part D coverage used these medications to treat various conditions, such as cancer, type 2 diabetes, and asthma, CMS stated.

According to CMS, these selected drugs made up about $42.5 billion in total gross covered prescription drug costs under Medicare Part D, which is roughly 15 percent, during that period.

“Using the same process with a bolder direction, we have achieved substantially better outcomes for taxpayers and seniors in the Medicare Part D program — not the modest or even counterproductive ‘deals’ we saw before," CMS Administrator Mehmet Oz, M.D., said in a statement.