The Centers for Medicare and Medicaid Services (CMS) has announced negotiated pricing for 15 selected drugs taking effect at the start of 2027, or the Initial Price Applicability Year (IPAY). The IPAY 2027 drugs are the second cycle of price negotiation as part of the Medicare drug price negotiation program. This program is a key provision of the Inflation Reduction Act of 2022 (IRA) with the intended goal of lowering prescription drug costs for retirees on Medicare and reducing federal government spending.
The Medicare drug price negotiation program requires CMS to directly negotiate with drug manufacturers to lower the prices for certain costly single-source drugs without generic or biosimilar competition. The IPAY 2027 drugs—which treat conditions such as cancer, diabetes, and asthma—have high costs and usage.
In 2024:
- About 5.3 million people, out of the 53 million with Medicare Part D coverage, used these selected drugs
- Their usage accounted for $42.5 billion in total Part D gross covered costs and $1.7 billion in out-of-pocket costs for enrollees
The announced price discounts for the Medicare Part D program are significant. GLP-1 drugs (Ozempic, Rybelsus, and Wegovy) received a 71% discount compared to the 2024 list price for a 30-day supply ($274 vs. $959). GLP-1s are used to treat Type 2 diabetes, Type 2 diabetes and cardiovascular disease, and cardiovascular disease and obesity. According to CMS, IPAY 2027 drug discounts should account for $12 billion in savings to taxpayers and $685 million in out-of-pocket cost savings for Medicare Part D enrollees.
Below is the list of negotiated prices, referred to as maximum fair prices (MFPs).
Note: Numbers other than prices are rounded to the nearest thousands. List prices are rounded to the nearest dollar and represent the Wholesale Acquisition Costs (WACs) for the selected drugs based on 30-day supply using CY 2024 prescription fills. Drug companies’ participation in the Negotiation Program is voluntary; the figures above represent estimates based on continued drug company participation in the Medicare program.
