Medicare Drug Price Cuts: Major Reductions Starting 2027

📌 What Happened — Major Drug Price Reductions for Medicare

In late November 2025, Medicare announced its second round of drug-price negotiations under the Inflation Reduction Act (IRA). Starting in 2027, 15 widely prescribed drugs across conditions like diabetes, obesity, cancer, asthma, and rare diseases will be available at significantly reduced prices for Medicare beneficiaries.

Headline Drug Price Reductions

Among the standout discounts are Ozempic and Wegovy, both semaglutide-based medications, which will face cuts of up to 71% from their 2024 list prices. For example, Medicare’s negotiated monthly price for these medications will be about $274, down from almost $959.

Scope of Negotiated Drugs

The list includes:

• Ozempic, Wegovy, and Rybelsus — for type 2 diabetes and obesity
• Trelegy Ellipta — for asthma and COPD
• Xtandi — for prostate cancer
• Pomalyst and Ibrance — for various cancers
• Ofev — for idiopathic pulmonary fibrosis
• Linzess — for chronic constipation and irritable bowel syndrome
• Selected drugs for rare and chronic conditions

Projected Savings for Medicare and Patients

Had these new prices been in place during 2024, Medicare’s spending on these drugs would have been roughly $12 billion less. For Medicare patients under Part D, out-of-pocket savings are estimated at around $685 million annually once these measures take effect.

Policy Background and Significance

This is one of the first direct drug price negotiation rounds Medicare has conducted since the Inflation Reduction Act granted this authority in 2022. This effort aims to curb drug spending and improve affordability for seniors, shifting away from opaque rebate systems toward transparent, negotiated pricing.

Lower prices stand to improve access and adherence for many patients managing chronic or serious diseases, while also helping ensure the sustainability of Medicare’s prescription drug coverage and easing the taxpayer burden.

What Remains to Be Seen

The negotiated prices take effect in 2027, so actual patient savings will depend on Medicare plan details and individual drug use. There is also ongoing industry debate on the impact of government-mandated pricing on pharmaceutical innovation.

Frequently Asked Questions

What drugs are included in Medicare’s new price negotiations?

A total of 15 drugs including Ozempic, Wegovy, Rybelsus, several cancer treatments, asthma and rare-disease medications are covered by the negotiated prices starting in 2027.

How large are the discounts negotiated by Medicare?

Discounts range broadly from about 38% up to 71% off typical 2024 list prices with high-profile drugs like Ozempic seeing reductions over 70%.

When will the new Medicare drug prices take effect?

The negotiated prices will take effect beginning in 2027, allowing a transition period after announcement.

How will these price reductions benefit Medicare patients?

Patients may see significant out-of-pocket cost savings, improved access to essential medications, and more predictable spending on drugs covered under Medicare Part D.

Why is Medicare now able to negotiate drug prices directly?

The Inflation Reduction Act of 2022 lifted a previous legal ban, allowing Medicare limited authority to negotiate directly with drug manufacturers for high-cost drugs, aiming to reduce expenditures.