- Medicare will begin price negotiations on 15 high-cost drugs, including Botox and Trulicity, in its third round of talks.
- The negotiations, authorized by the 2022 Inflation Reduction Act, target drugs accounting for $27 billion in annual Medicare spending.
- Negotiated prices from this round will take effect in 2028, following a process that includes manufacturer agreements by February 28.
- The program expands to include Part B drugs administered in clinics, alongside the Part D retail medications from prior rounds.
- The initiative aims to reduce costs for taxpayers and beneficiaries, with prior rounds projected to save billions.
The federal government has identified 15 of Medicare’s most expensive prescription drugs for direct price negotiations this year. The Trump administration, through the Centers for Medicare and Medicaid Services (CMS), announced the list on January 27, initiating the third round of talks under a program born from the Biden-era Inflation Reduction Act. This round notably expands the scope to include high-cost medications administered in doctors’ offices and hospitals, marking a new phase in the government’s effort to curb pharmaceutical spending for seniors and taxpayers.
The expanding arsenal of negotiation
The 2022 Inflation Reduction Act fundamentally altered the relationship between the federal government and the pharmaceutical industry by granting Medicare, the world’s largest drug purchaser, the authority to negotiate prices directly. The law mandates negotiations for at least 60 drugs by 2029. The first round, targeting 10 Part D medications, saw prices take effect at the start of this year. The second round, announced last year, will set prices for 2027. This third round is the first to incorporate drugs covered under Medicare Part B, which includes medications like infusions and injections given in clinical settings, alongside those dispensed at pharmacies under Part D.
The selected drugs treat a wide range of serious conditions:
- Biktarvy for HIV
- Trulicity for Type 2 diabetes
- Kisqali and Verzenio for breast cancer
- Entyvio for Crohn's disease and ulcerative colitis
- Botox for chronic migraines and muscle spasms
- Xolair for asthma
Between November 2024 and October 2025, more than 1.7 million Medicare beneficiaries used these medications, which accounted for approximately $27 billion in program spending.
The mechanics and mandate of market intervention
The negotiation process follows a structured timeline. Drug manufacturers have until February 28 to decide whether to participate. While they can opt out, doing so would trigger steep financial penalties or potentially lead to the drug’s exclusion from the massive Medicare market—a consequence no company has yet risked in prior rounds. CMS will conduct negotiations throughout the year, with the final negotiated "maximum fair prices" announced by November 30. These prices will not take effect until 2028, reflecting the deliberate, multi-year timeline established by the law.
The program’s design includes provisions for renegotiation if market conditions change significantly. This is evidenced by the inclusion of the diabetes drug Tradjenta in this round for a second time, after its price was reduced by 84% in the previous negotiation cycle. CMS estimates that if the negotiated prices from the first two rounds had been in effect in 2024, taxpayers would have saved $18 billion and beneficiaries would have seen $2.2 billion in reduced out-of-pocket costs.
A long-debated lever
The concept of federal drug price negotiation is not new, but its implementation represents a seismic shift after decades of legislative debate. Prior to the Inflation Reduction Act, Medicare was explicitly prohibited from negotiating drug prices for its Part D program, a condition of the program’s creation in 2003 to secure pharmaceutical industry support. Proponents argued negotiation would stifle innovation, while critics pointed to the Veterans Health Administration’s ability to negotiate as proof of potential savings. The current program, while groundbreaking, remains more limited than some original proposals, which envisioned negotiated prices being available to all payers, not just Medicare.
Balancing cost, access and innovation
The ongoing negotiations sit at the heart of a perennial tension in American healthcare policy: balancing the need for affordable medicines with the argument that high returns fuel the research for future cures. The pharmaceutical industry has consistently challenged the negotiation provision in court, though initial legal setbacks have not halted the process. Administration officials frame the action as critical for fiscal sustainability and patient relief. "For too long, seniors and taxpayers have paid the price for skyrocketing prescription drug costs," said CMS Administrator Dr. Mehmet Oz, asserting the agency's role in ensuring "the system works for patients—not special interests."
Analysts note the near-term financial impact on large pharmaceutical companies may be muted for most drugs on the list, with Medicare revenue exposed to negotiation often representing a small slice of global sales. However, the precedent of government-set prices for top-selling products introduces a new and enduring variable into the industry’s economic model.
A forging path in pharmaceutical policy
As the negotiation program advances into its third year, it is cementing itself as a permanent fixture of the U.S. healthcare landscape. The inclusion of Part B drugs demonstrates the program’s expanding reach into new categories of medical spending. While the political origins of the policy remain a point of contention, its execution now crosses administrative lines, with the current administration overseeing the implementation of a law passed by its predecessor. The coming negotiations over these 15 drugs will further test the mechanism’s ability to lower federal expenditures and patient costs without disrupting the market, setting the stage for the dozens of negotiations still to come by the end of the decade. The results will provide critical data in the enduring debate over the government’s proper role in the pharmaceutical marketplace.
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