CMS: Year-Two Medicare Drug Negotiations Lock In $12B Savings and Deep Price Cuts for Popular Treatments

The administration announced that the second year of Medicare drug price negotiations has produced roughly $12 billion in projected federal savings, with negotiated prices set to take effect in 2027 for 15 medicines. Officials estimate the new prices will reduce out-of-pocket spending for Medicare prescription drug enrollees by about $685 million. The negotiated drugs were used by roughly 5.3 million Medicare beneficiaries last year.

Among the notable outcomes, CMS secured approximately 50% discounts for Pfizer’s breast cancer drug Ibrance and Boehringer Ingelheim’s lung fibrosis treatment Ofev compared with their 2024 list prices. Negotiated Medicare prices for Novo Nordisk products amount to $274 for a 30-day supply of Ozempic and Rybelsus, and $385 for Wegovy—about a 71% reduction from 2024 list prices. Nearly 2.3 million Medicare beneficiaries used those brands last year.

CMS officials credit a stronger negotiating posture — including a willingness to walk away from talks — and legal defense of the program as key factors in securing these discounts. Under the Inflation Reduction Act, manufacturers that decline negotiated terms could face either withdrawal from Medicare and Medicaid or steep excise penalties, a dynamic that gives CMS leverage in talks.

Drugs included in the 2027 negotiated list

• Ibrance (breast cancer)
• Ofev (lung fibrosis)
• Ozempic, Rybelsus, Wegovy (Novo Nordisk—diabetes and weight management)
• Trelegy Ellipta (asthma/COPD)
• Xtandi (prostate cancer)
• Pomalyst (multiple myeloma)
• Linzess (irritable bowel syndrome)
• Calquence (leukemia)
• Austedo and Austedo XR (Huntington’s disease chorea)
• Breo Ellipta (asthma)
• Xifaxan (irritable bowel syndrome)
• Vraylar (bipolar disorder, schizophrenia)
• Tradjenta, Janumet, Janumet XR (Type 2 diabetes)
• Otezla and Otezla XR (plaque psoriasis, psoriatic arthritis)

CMS says the $12 billion figure represents a 44% reduction if 2027 prices were applied to 2024 spending. Agency officials also note an alternate methodology that accounts for concurrent changes to Medicare Part D under the Inflation Reduction Act—this yields a net savings closer to $8 billion, or about 36%.

“A true negotiation implies that you might not reach a negotiated outcome,” said Chris Klomp, deputy administrator at CMS, emphasizing the balance between pushing for lower prices and keeping medicines accessible while preserving incentives for drug development.

Policy analysts had expected larger savings in year two because more drugs were eligible for negotiation and several are high-cost cancer therapies with relatively small manufacturer rebates—conditions that can allow CMS to extract deeper discounts. In recent months, progressive lawmakers urged the administration to defend the negotiation program vigorously in court; CMS has continued to defend the program amid multiple legal challenges from drugmakers and has proceeded with the negotiation process.

These agreements mark the completion of negotiations for all 15 drugs in this round, negotiated by the same CMS career staff who led last year’s talks. Officials say the results will lower federal spending and help Medicare beneficiaries facing high prescription costs, while litigation and policy debates over program design continue.