Big Savings Ahead: Medicare Cuts Costs On 15 Drugs

The high cost of prescription medications can be crippling in the United States. According to a report by the IQVIA Institute for Human Data Science, Americans spent $98 billion out-of-pocket on prescription drugs — an increase of 24% in just five years. With so many households living paycheck to paycheck, drug prices can be a particularly tough burden to bear. That's especially true for older Americans, many of whom are on a fixed income and rely on Medicare to help shoulder their healthcare costs. However, for Medicare recipients hoping for relief, there is some good news. Discounts on prescription drugs are coming, as prices for 15 widely used medications are set to decrease — some by more than 80%, according to a fact sheet from the Center for Medicare & Medicaid Services (CMS). 

The price cuts stem from the Inflation Reduction Act of 2022, which, for the first time, gave Medicare the authority to negotiate prices on some of the most expensive and widely used drugs. Prices for the 15 drugs that were recently announced — including medications that treat cancer, diabetes, and asthma — will go into effect for Medicare Part D recipients at the beginning of 2027. These drugs will join an earlier batch of 10 medications, whose negotiated prices will take effect in 2026. Per CMS, the initial batch of 10 drugs is expected to save beneficiaries about $1.5 billion in yearly out-of-pocket costs. Meanwhile, the second round of cuts is projected to save an estimated $685 million in out-of-pocket expenses for 5.3 million Part D recipients.

Some of the drugs on the list that will see the steepest price cuts in 2027 include two Type 2 diabetes medications, including Janumet and Janumet XR, which will drop to $80 for a 30-day supply, down from $526 in 2024 — an 85% decrease. Tradjenta's price, meanwhile, will fall 84%, from $488 to $78. Asthma drug Breo Ellipta will also see a significant reduction, with its price slashed 83%, to $67 from $397. Among the other medications — which are used to treat cancers such as prostate, breast, and certain lymphomas, as well as conditions related to schizophrenia, irritable bowel syndrome, and other diseases — price cuts will range from 38% to 75%.

Popular weight-loss drugs Ozempic, Wegovy, and Rybelsus, which have exploded in popularity in recent years, also made the list. The medications, which are taken by nearly 2.3 million Medicare Part D beneficiaries — more than any other medications in the program — will see prices drop 71% to $274 from $959 for a 30-day supply. The new, negotiated prices will stay in effect as long as the drugs remain a part of the Medicare Drug Price Negotiation Program, though they will be adjusted for inflation after the first year based on the Consumer Price Index. There will be a third round of negotiations for 15 additional drugs that will go into effect in 2028, helping Medicare recipients save on prescriptions even more.