A federal projection puts Medicare’s drug-negotiation savings at $1.5 billion this year, a number large enough to lose sight of the person actually standing at the pharmacy counter. Take an enrollee filling a 30-day supply of the blood thinner Eliquis: the 2023 list price ran $521, while the price Medicare negotiated for 2026 is $231, a gap that shows up one refill at a time rather than as a lump sum. The $1.5 billion is the Centers for Medicare & Medicaid Services’ own estimate of what that kind of gap adds up to across every enrollee filling one of ten negotiated drugs in 2026, a projection built into the benefit design rather than a check anyone receives in the mail.
How CMS Built the $1.5 Billion Estimate
The projection traces back to the Medicare Drug Price Negotiation Program created by the Inflation Reduction Act, which for the first time let Medicare set Maximum Fair Prices for a short list of high-cost drugs covered under Part D. CMS selected ten drugs for the first negotiation cycle, negotiated new prices with the manufacturers through 2024, and confirmed all ten prices would take effect January 1, 2026. The agency’s fact sheet on the first cycle frames the $1.5 billion as an aggregate estimate under the program’s projected defined standard benefit design, not a sum paid out to any individual enrollee.
Roughly 8.8 million of the 54 million people enrolled in Part D used one of the ten selected drugs in 2023, and their combined out-of-pocket spending on just those ten drugs that year came to $3.9 billion, according to CMS’s fact sheet on the first negotiation cycle. That baseline population is what the agency used to model how much of the $3.9 billion the negotiated prices are expected to erase once they apply for a full year.
The $1.5 billion is often confused with a second, larger figure CMS also published: an estimated $6 billion in net savings for the Medicare program itself, equal to about 22 percent lower net spending, if the negotiated prices had applied to 2023 spending across the ten drugs. That $6 billion measures what Medicare and its Part D plans would have paid manufacturers. The $1.5 billion measures only the narrower slice that reaches an enrollee’s own out-of-pocket costs.
Free retirement updates: Social Security and Medicare change every year, and nobody sends you a memo. Our free Retirement Shield newsletter breaks down what changed and what to do. Get it free in your inbox.
Ten Drugs, Discounts From 38 to 79 Percent Off 2023 List Prices
The negotiated prices span a wide range, because the ten selected drugs treat everything from diabetes to blood cancer and carried very different list prices to start. Januvia, the Merck diabetes drug, drops from a $527 list price for a 30-day supply to $113, a 79 percent cut. Imbruvica, a blood-cancer drug from Pharmacyclics, falls only 38 percent, from $14,934 to $9,319. Farxiga, a diabetes and heart-failure drug from AstraZeneca used by nearly a million Part D enrollees in 2023, was negotiated down 68 percent, from $556 to $178.50. Eliquis, the most widely used of the ten with roughly 3.9 million Part D enrollees on it in 2023, lands in between at a 56 percent discount.
CMS and HHS restated the 38-to-79-percent range and the $1.5 billion projection together in a January 2026 announcement about the next round of negotiations, which also cited a separate federal analysis projecting that about 11 million Part D enrollees would reach the 2025 annual out-of-pocket cap, saving a combined $7.2 billion, or roughly $600 apiece, once they crossed it.
The Out-of-Pocket Cap Rose to $2,100 for 2026
A separate Inflation Reduction Act provision, the annual cap on Part D out-of-pocket drug spending, works alongside the negotiated prices rather than because of them. The cap began at $2,000 in 2025, the first year it existed. CMS’s Part D Redesign Program Instructions set the 2026 threshold at $2,100, adjusted upward under the formula the law requires for annual growth in Part D drug spending. Once an enrollee’s true out-of-pocket costs for covered drugs reach $2,100 in 2026, the plan covers the remaining Part D drug costs for the rest of the calendar year.
The two provisions can compound for someone on a negotiated drug: a lower negotiated price reduces the total owed before hitting the cap, while the cap itself limits how much of that total lands on the enrollee rather than the plan. CMS’s program instructions for the 2026 benefit year also set the annual deductible at $615, the amount an enrollee pays before either provision applies.
Fifteen More Drugs Already Cleared for the Next Round
The Medicare Drug Price Negotiation Program does not stop with the first ten drugs. CMS selected 15 additional drugs for a second negotiation cycle, with manufacturer negotiations running through 2025 and any resulting prices scheduled to take effect in 2027. Those 15 drugs covered roughly 5.3 million Part D enrollees between November 2023 and October 2024 and accounted for about $41 billion in gross Part D drug spending during that window, on top of the first cycle’s ten drugs.
The law schedules further growth beyond that: CMS can select up to 15 more drugs for a third negotiation cycle, including drugs covered under Part B, and up to 20 additional drugs in each cycle after that. Each new cycle adds roughly two more years before its negotiated prices take effect, since manufacturers get a negotiation period before a price applies.
What the Projection Does Not Guarantee Any One Enrollee
None of these figures amount to a promise that a specific enrollee will see a fixed dollar amount tied to a single prescription, or an even slice of $1.5 billion. Actual savings depend on which of the ten negotiated drugs someone takes, the dose and quantity prescribed, and how a given Part D plan structures coverage before and after the deductible. CMS’s own language keeps the estimate at the aggregate level: the agency projects what enrollees as a group would save under the new prices and the redesigned benefit, not what any individual’s pharmacy receipt will show over the course of 2026.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
More Financial Reading
- Adding someone to your bank account: tax traps and smart moves
- Bank statements: how long to keep them and when to toss them
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
