IRA Drug Price Negotiation: Impact on Medicare Part D

The Inflation Reduction Act of 2022 authorized Medicare to negotiate prices on high-cost drugs for the first time in the program's history. The first 10 drugs selected for negotiation represent a staggering $21.96B in annual Medicare Part D spending — a watershed moment in U.S. drug pricing policy.

The 10 Negotiated Drugs

In August 2023, CMS announced the first 10 drugs selected for Medicare price negotiation under the IRA. These drugs were chosen because they had the highest total Part D spending with no generic or biosimilar competition. Negotiated prices take effect on January 1, 2026, and are expected to save Medicare billions annually.

Why These Drugs?

The IRA requires CMS to select drugs that have been on the market for at least 7 years (small-molecule) or 11 years (biologics), have no generic or biosimilar competition, and rank among the highest in total Medicare Part D spending. The first cohort is dominated by cardiovascular drugs like Eliquis (apixaban, $7.75B) and Xarelto (rivarelbaan), diabetes treatments like Jardiance and Januvia, and specialty biologics like Enbrel, Stelara, and Imbruvica.

Together, these 10 drugs account for approximately 20% of all Medicare Part D drug spending — an extraordinary concentration of cost in a handful of brand-name products. Eliquis alone represents more Part D spending than thousands of generic drugs combined.

Estimated Savings

The Congressional Budget Office (CBO) estimates that IRA drug price negotiation will save Medicare approximately $98.5 billion over the first decade (2026–2035). For the initial 10 drugs, negotiated prices are expected to be 25–60% lower than current list prices, depending on how long each drug has been on the market.

What This Means for Prescribers

Price negotiation does not change which drugs providers can prescribe — it changes what Medicare pays. However, the lower negotiated prices will flow through to beneficiary cost-sharing, potentially improving medication adherence. Providers prescribing these drugs to Medicare patients should expect changes in formulary placement and prior authorization requirements starting in 2026.

The IRA also includes an inflation rebate provision: if drug manufacturers raise prices faster than inflation, they must pay rebates to Medicare. This creates downward pressure on list prices even for drugs not yet selected for negotiation.

Broader Context

The United States spends more on prescription drugs per capita than any other developed nation. Medicare Part D, which covers outpatient prescriptions for over 50 million beneficiaries, has historically been prohibited from negotiating drug prices — a restriction that the IRA partially lifts. Critics argue the negotiation scope is too narrow (only 10 drugs initially) and the timeline too slow, while pharmaceutical companies have filed lawsuits challenging the constitutionality of the program.

Regardless of the legal outcome, the data on this page illustrates the extraordinary concentration of Medicare spending in a small number of brand-name drugs. Understanding which drugs cost the most — and who prescribes them — is essential context for any conversation about drug pricing reform.