Is Medicare about to get cheaper? Trump Administration unveils massive $12B drug price savings for 2027
CMS announces $12B Medicare savings from new drug price negotiations. Image Credit: FairSquare
The Trump administration has announced one of the most significant shifts in the Medicare drug pricing landscape, revealing an estimated $12 billion in federal savings tied to the second round of Medicare price negotiations. The announcement marks a major escalation of the Inflation Reduction Act’s (IRA) cost-cutting efforts and signals a new phase in the ongoing battle over prescription drug affordability in the United States.
Medicare Drug Price Negotiations Deliver $12B in Projected Savings
According to federal health officials, the new negotiated prices, covering 15 widely used, high-cost medications, will take effect in 2027. The updated pricing slate is projected to save not only the Medicare program billions, but also reduce out-of-pocket expenses for seniors by $685 million, directly benefiting the 5.3 million beneficiaries who relied on these drugs last year.
Among the most notable reductions are critical treatments for chronic conditions, including Pfizer’s breast cancer drug Ibrance, lung fibrosis treatment Ofev, and a sweeping set of diabetes and weight-loss medications produced by Novo Nordisk.
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Massive Discounts on Ozempic, Rybelsus, and Wegovy
One of the biggest headlines centers on Novo Nordisk’s blockbuster products, Ozempic, Rybelsus, and Wegovy.
Under the new negotiated prices:
- Ozempic: $274 for a 30-day supply
- Rybelsus: $274
- Wegovy: $385
These represent a dramatic 71% discount from 2024 list prices, offering relief to nearly 2.3 million Medicare beneficiaries who used these medications last year.
The administration emphasized that these discounts are the result of a willingness to “walk away from the table” during negotiations, a strategy that forced drugmakers to accept deeper cuts or risk exclusion from federal programs covering around 150 million Americans.
Trump Administration Claims ‘Double’ Biden-Era Savings
CMS officials assert that this $12 billion figure nearly doubles the savings from the first round of Biden-era Medicare negotiations, which targeted 10 drugs and were estimated to save $6 billion.
However, independent health policy experts note that both cycles use different baseline calculations. Accounting for structural changes in the Part D program, real savings from the second cycle appear closer to $8 billion, still marking a substantial gain.
15 Major Drugs Receive New Negotiated Prices
Alongside cancer and diabetes medications, the negotiated list includes treatments for asthma, irritable bowel syndrome, bipolar disorder, schizophrenia, plaque psoriasis, leukemia, and Huntington’s disease. This diversity of drugs reflects the administration’s broader push to bring down costs across multiple high-spend categories.
Advocacy Groups Respond: Applause & Warnings
Reactions were split along ideological lines:
- Patients for Affordable Drugs celebrated the announcement, calling it “a victory for patients and taxpayers.”
- The Pharmaceutical Research and Manufacturers of America (PhRMA) criticized the moves, arguing that government-mandated pricing threatens pharmaceutical innovation.
Meanwhile, Democrats, including Rep. Frank Pallone (D-N.J.), applauded the continued enforcement of the IRA, which passed without a single Republican vote back in 2022.
Legal Battles Continue, but CMS Pushes Ahead
Despite multiple lawsuits from drugmakers attempting to block or delay the negotiations, the Trump administration has thus far defended the program in court, where pharmaceutical companies have faced several losses.
CMS insists that it will continue pushing the boundaries of the law to “ensure affordability while maintaining program sustainability.”
FAQ
1. What is the new $12 billion Medicare savings announcement about?
The Trump administration announced that the second round of Medicare drug price negotiations will generate $12 billion in federal savings once the new prices take effect in 2027. These savings come from negotiated price reductions on 15 high-use, high-cost drugs.
2. When will the new Medicare drug prices start?
The negotiated prices are scheduled to take effect January 2027. Beneficiaries will begin seeing reduced premiums and out-of-pocket costs at that time.
3. Which drugs received new Medicare-negotiated prices?
The list includes treatments for cancer, diabetes, weight loss, asthma, irritable bowel syndrome, plaque psoriasis, schizophrenia, and more. High-profile drugs include Ozempic, Wegovy, Rybelsus, Ibrance, Ofev, Xtandi, Pomalyst, Linzess, Xifaxan, Trelegy Ellipta, and others.
4. How much cheaper will Ozempic and Wegovy be under Medicare?
- Ozempic: $274/month
- Wegovy: $385/month
These represent 71% discounts from their 2024 list prices.
5. How many Medicare beneficiaries will the savings impact?
Over 5.3 million people used the affected drugs in the past year, meaning millions of seniors will benefit from lower prices.
6. Did the Trump administration achieve more savings than Biden’s first round?
According to CMS, yes. The $12B figure nearly doubles Biden’s first-year estimate of $6B. However, independent analysts note that different baselines may reduce that advantage to around $8B in practical savings.
7. Why are drugmakers criticizing the negotiations?
Pharmaceutical companies argue that mandatory price negotiations reduce funds for research and development. Advocacy groups dispute this, saying the industry remains highly profitable.
8. Is the Medicare negotiation program facing legal challenges?
Yes. Multiple lawsuits have been filed by drug manufacturers, but CMS has won most early rulings, allowing negotiations to continue.
9. Will these negotiations affect future Medicare drug prices?
Yes. Each year, an increasing number of medications become eligible for negotiation, meaning annual price reductions could continue for the foreseeable future.
10. Will Medicare beneficiaries see lower out-of-pocket costs soon?
Yes. Seniors are expected to save an estimated $685 million per year in direct out-of-pocket costs once the 2027 prices are implemented.