The Inflation Reduction Act allows Medicare to negotiate some drug prices

What the law actually did

Public Law 117-169, signed in August 2022, let Medicare negotiate prices directly with drug manufacturers for the first time.

CMS set out the schedule in January 2023. Ten Part D drugs would be named by September 1, 2023. Negotiated prices, which the statute calls maximum fair prices, would be announced by September 1, 2024, and would take effect on January 1, 2026. After that, 15 more Part D drugs for 2027, 15 Part B or Part D drugs for 2028, and 20 more each year afterward.

Only drugs with high Medicare spending and no generic or biosimilar competitor are eligible. This is not a price cap across the market, and it does not touch commercial insurance.

What the first round produced

CMS published the negotiated prices on August 15, 2024.

In 2023, about 8.8 million of the 54 million people with Part D coverage used the ten selected drugs. Those drugs accounted for $56.2 billion, roughly 20% of all Part D gross covered drug costs. People with Part D paid $3.9 billion out of pocket for them.

CMS estimated that if the negotiated prices had applied in 2023, they would have cut about $6 billion, or 22%, from net spending on those drugs.

One of the ten treats cancer. Imbruvica, used for blood cancers, went from a list price of $14,934 for a 30-day supply to a negotiated $9,319, a 38% cut. About 17,000 Part D enrollees used it in 2023 — the smallest number of any drug on the list, and the highest price.

The cancer drugs arrive in cycle three

The picture changed in January 2026. CMS named 15 drugs for the third cycle, with prices effective January 1, 2028, and for the first time the list reaches into Part B, which covers drugs given in a clinic rather than picked up at a pharmacy.

Four of the 15 are cancer treatments: Erleada, Kisqali, Lenvima, and Verzenio. CMS said the 15 drugs were used by about 1.8 million people with Part D or Part B coverage between November 2024 and October 2025, for conditions including cancer, and accounted for about $27 billion.

CMS also reported that the second cycle reached agreement on all 15 of its drugs, with prices starting January 1, 2027. Had those applied in 2024, CMS estimates they would have cut net spending on them by about 36%.

The change that reaches more people faster

Negotiation is the headline, but for someone taking an expensive cancer pill, a different part of the same law does more.

Medicare's own guidance describes the current Part D structure. No plan may set a deductible above $615 in 2026. After the deductible, a person pays 25% coinsurance until their out-of-pocket spending on covered Part D drugs reaches $2,100 in 2026. From that point, catastrophic coverage begins and there is nothing more to pay for covered Part D drugs for the rest of the calendar year.

That ceiling matters most to people on oral cancer drugs, where a single prescription can cost thousands a month and the old design had no upper limit at all. Our page on Medicare and cancer explains how the parts fit together.

Where it does not reach

Part D covers drugs from a pharmacy. Many cancer treatments — infused chemotherapy, most immunotherapy — are given in a clinic and billed under Part B, where the $2,100 ceiling does not apply. Part B generally leaves 20% coinsurance with no annual cap unless a supplement or Medicare Advantage plan covers it.

The negotiation program only reached Part B drugs in the third cycle, with prices starting in 2028. Our page on financial assistance for cancer covers what exists in the meantime, and our page on copay assistance programs covers how to apply.

What this does not mean

• This is Medicare only. It does not change what anyone with employer coverage or a Marketplace plan pays.
• Negotiation covers a short list. In the first cycle, 10 drugs out of thousands, and one of them treated cancer.
• The savings figures are CMS estimates modeled on past spending, not audited results.
• Manufacturer participation is voluntary in the statute's own terms, and CMS notes its figures assume continued participation.
• Program rules and dollar figures change every year. Check the current CMS and Medicare pages before relying on any number here.

When to get checked

A page about drug pricing is still a page about cancer care, so the practical prompt belongs here.

If you have Medicare and a cancer diagnosis, three things are worth doing at the start of each calendar year rather than after a bill arrives:

• Check which of your drugs are billed under Part D and which under Part B, because the out-of-pocket ceiling only applies to one of them
• Ask the cancer center whether a financial navigator can review your plan before treatment starts
• Ask whether the manufacturer runs an assistance program for the specific drug you are prescribed

And the ordinary rule still applies. New symptoms that last more than two to three weeks — unexplained bleeding, a lump, a cough or change in bowel habit that will not settle, or weight loss you did not intend — need a doctor, whatever the cost picture looks like.

Sources

• CMS, HHS Announces Key Dates for the First Year of the Inflation Reduction Act's Medicare Drug Price Negotiation Program — https://www.cms.gov/newsroom/press-releases/hhs-announces-key-dates-first-year-inflation-reduction-acts-medicare-drug-price-negotiation-program
• CMS fact sheet, Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability Year 2026 — https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf
• CMS, Announces Selection of Drugs for Third Cycle of Medicare Drug Price Negotiation Program — https://www.cms.gov/newsroom/press-releases/cms-announces-selection-drugs-third-cycle-medicare-drug-price-negotiation-program-including-first
• Medicare.gov, How much does Medicare drug coverage cost? — https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage

How this article was prepared

An AI-assisted editorial system helped prepare this page. No named medical reviewer has reviewed it unless one is listed.

The National Cancer Information Foundation publishes Cancer Explained. This page is for learning. It is not medical advice and does not suggest a test or treatment.

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