Estimated discounts generated by Medicare drug negotiation in 2026

BACKGROUND: Starting in 2026, Medicare will be able to negotiate drug prices. Although recent reports have identified the drugs that will likely face negotiation, no study has estimated the maximum negotiated price according to guidance from the Centers for Medicare and Medicaid Services. OBJECTIVE: To identify the maximum negotiated price for the 10 drugs expected to be negotiated by Medicare in 2026. METHODS: We apply peer-reviewed methodology to estimate 2020 rebates for the 10 drugs anticipated to be negotiated by Medicare in 2026. We compare rebates to the statutory minimum discounts to identify the maximum negotiated price in 2026 and estimate savings. RESULTS: The minimum discount stipulated by the Inflation Reduction Act exceeds 2020 rebates for 4 of the 10 drugs expected to be negotiated in 2026, including etanercept, which is subject to a minimum discount of 60%, compared with an estimated rebate of 39.1%, and the cancer drugs ibrutinib, palbociclib, and enzalutamide, all of which will be subject to a minimum discount of 25%, compared with estimated rebates of 9%, 5.7% and 15.0%, respectively. Based on 2020 gross spending, the minimum required discount on these 4 drugs would generate savings of $1.8 billion. CONCLUSIONS: In 2026, minimum discounts will only apply to 4 of 10 drugs likely subject to negotiation. For most drugs, net prices will establish the ceiling for the negotiated price. To achieve the savings projected by the Congressional Budget Office ($3.7 billion), negotiated prices will have to fall below the ceiling for the negotiated price established by the statute.

Automated summary

This study identifies the maximum negotiated price for the 10 drugs expected to be negotiated by Medicare in 2026. The results show that minimum discounts will only apply to 4 of the 10 drugs likely subject to negotiation, and achieving the projected savings will require negotiated prices to fall below the established ceiling.