Definition. A federal law enacted in August 2022 whose Medicare provisions, phased in from 2023, changed Part D's design and created Medicare drug price negotiation.
What it means
- Insulin (2023): covered insulin costs no more than $35 for a month's supply, with no deductible.
- Vaccines (2023): adult vaccines recommended by the CDC's advisory committee, such as shingles, cost $0 under Part D.
- Out-of-pocket cap (2025): the coverage gap ended and Part D got a yearly cap on out-of-pocket costs for covered drugs: $2,100 in 2026, rising each year.
- Medicare Prescription Payment Plan (2025): you can spread out-of-pocket drug costs into monthly payments.
- Drug price negotiation: negotiated prices for the first 10 drugs took effect January 1, 2026, and prices for 15 more, including Ozempic, Rybelsus and Wegovy, take effect January 1, 2027. A third round, including the first Part B drugs, is set for 2028.
- Inflation rebates: drug makers pay Medicare rebates when prices rise faster than inflation.
Sources
- Medicare.gov — Costs in the coverage phases of Part D
- Medicare.gov — Medicare Prescription Payment Plan
- CMS — Medicare Drug Price Negotiation Program
- CMS — Negotiated prices for initial price applicability year 2026 (PDF)
- CMS — Negotiated prices for initial price applicability year 2027 (PDF)
Frequently asked questions
Does a negotiated price mean my drug is cheaper?
It lowers the price Medicare plans pay. What you pay still depends on your plan's formulary, deductible and copays, and your total out-of-pocket costs for covered drugs are capped each year.
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