Medicare 2026

Medicare Drug Price Negotiation: What It Means for Part D in 2027

Starting January 1, 2027, Medicare's drug price negotiation program moves into its next phase. Negotiated prices for a second group of 15 Part D drugs take effect, joining the first 10 drugs whose negotiated prices began on January 1, 2026. If you take one of the medicines on these lists — or you're just trying to understand how the program affects your Part D coverage — here is a plain-English look at what's changing, what isn't, and what to watch for during this fall's Annual Enrollment Period.

Where the negotiation program stands

The Inflation Reduction Act gave Medicare the authority to negotiate prices on certain high-cost drugs for the first time. CMS runs the process one drug company at a time: an initial offer from Medicare, a counteroffer from the manufacturer, and up to three negotiation meetings. For the second round, those negotiations wrapped up on November 1, 2025, with an agreed price for all 15 drugs. Those prices begin on January 1, 2027.

CMS estimates that if the 2027 negotiated prices had been in effect in 2024, Medicare would have saved roughly $12 billion — about 44 percent — on these drugs. The agency also projects about $685 million in out-of-pocket savings for people with Part D in 2027.

A negotiated price doesn't reset every year. Once set, it stays in effect while the drug remains in the program, and after the first year it is adjusted annually by the change in the Consumer Price Index (CPI-U). CMS publishes the updated prices.

Looking further ahead, CMS has already selected 15 more drugs for a third round, with negotiated prices taking effect beginning in 2028. This is the first round to include drugs paid under Part B, in addition to Part D.

What this means for your Part D coverage

Every Part D plan — whether it's a stand-alone drug plan paired with Original Medicare or the drug coverage built into a Medicare Advantage plan — must cover the drugs that have negotiated prices. But "must cover" doesn't mean "same price everywhere." What you actually pay at the pharmacy depends on your plan's cost sharing: its deductible, its tier structure, and the copays or coinsurance it assigns to each drug.

Two important program-level numbers for 2027:

• The Part D out-of-pocket cap is $2,400. Once your out-of-pocket spending on covered drugs hits that amount, you pay $0 for covered Part D drugs for the rest of the year.
• The maximum deductible a Part D plan can charge is $700. Plans may charge less, but not more.

There's also a national base beneficiary premium of $41.33 for 2027. This figure is used to calculate the Part D late-enrollment penalty; actual plan premiums are set plan by plan and vary.

Read your Annual Notice of Change

Each fall, your current Part D or Medicare Advantage plan sends an Annual Notice of Change (ANOC) explaining what will be different next year — the formulary (the plan's list of covered drugs), tier placements, cost sharing, and premium. If one of your medications is on the negotiated-price list, the ANOC and the plan's 2027 formulary will show how it's being covered. That's the document to pull out before you make any decisions during Annual Enrollment, which runs October 15 – December 7, 2026, with new coverage starting January 1, 2027.

Original Medicare + Medigap, or Medicare Advantage?

Drug negotiation applies on the Part D side regardless of how you get the rest of your Medicare. People often weigh two broad paths:

• Original Medicare with a stand-alone Part D plan and (often) a Medigap policy. This path typically offers broad provider access and predictable supplemental coverage, but you pay separate premiums and Medigap doesn't cover drugs.
• Medicare Advantage, which bundles Parts A, B, and usually D together. These plans often include extra benefits and use provider networks and prior authorization rules.

Neither path is "better" — the right fit depends on your doctors, your medications, your budget, and how you prefer to manage care. Compare specifics on Medicare.gov.

Special rules for Medicaid and Extra Help

Since 2025, people who have Medicaid or qualify for Extra Help have a monthly Special Enrollment Period to switch to Original Medicare with a stand-alone Part D plan, or to switch from one stand-alone Part D plan to another. Full-benefit dual-eligible individuals can also join an integrated Dual Eligible Special Needs Plan (D-SNP) in any month. This flexibility makes it easier to react if a drug's coverage changes.

A few 2027 numbers aren't out yet

CMS announces the 2027 Part B standard premium and deductible, along with the IRMAA income brackets and surcharges, in the fall — usually November. Until then, no one should quote or estimate those figures. Separately, the Social Security Administration announced a 3.6 percent cost-of-living adjustment (COLA) on October 14, 2026, for benefits payable beginning January 2027.

Where can you get help with Medicare questions?

For official plan details, drug lookups, and enrollment, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), available 24/7.

This article is educational and is published by an independent, privately owned Medicare resource. We are not affiliated with the federal government or any insurance company.