CMS Announces Major Price Cuts for 15 Top Medicare Drugs Under IRA: What It Means for Patients and Pharma

CMS Unveils Historic Drug Price Reductions: The Heart of the IRA’s Second Wave

In a move that’s already making waves across the healthcare landscape, the Centers for Medicare & Medicaid Services (CMS) officially announced a sweeping series of price cuts for 15 of the most expensive drugs in the Medicare system. The announcement, delivered just ahead of Thanksgiving 2025, marks the second—and most ambitious—round of negotiations under the Inflation Reduction Act (IRA). For millions of Americans, especially seniors and those living with chronic illnesses, this news could mean real relief at the pharmacy counter.

According to Pharmaceutical Commerce, CMS estimates a net savings of 44%, equating to $12 billion, compared to what Medicare spent on these drugs in 2024. The price reductions will take effect January 1, 2027, and cover medications ranging from diabetes and weight management treatments to cancer therapies. The first batch of negotiated prices, announced in August 2024, is set to go live in January 2026.

Ozempic, Wegovy, and More: Who Benefits Most?

Among the headline-grabbing changes is the dramatic 71% price cut for Novo Nordisk’s diabetes and weight loss drugs, Ozempic and Wegovy. Starting in 2027, Medicare recipients will pay a negotiated monthly cost of $274—down from a 2024 list price of $959. However, under a separate Most Favored Nation (MFN) agreement with the Trump administration, these same drugs were slated for an even lower price of $245 a month. This discrepancy has fueled debate among policy analysts about the interplay between IRA negotiations and MFN executive orders.

But the savings aren’t limited to diabetes drugs. Pfizer’s breast cancer medication Ibrance (palbociclib) will drop from $15,741 to $7,871 per month—a 50% reduction. Other medications on the list address cancers, asthma, and various chronic conditions. Collectively, these 15 drugs represented $42.5 billion in Medicare Part D spending in 2024, or roughly 15% of the program’s total outpatient prescription drug costs.

The IRA’s Negotiation Process: How Are These Prices Set?

The IRA gives Medicare new authority to negotiate directly with pharmaceutical companies, aiming to improve access and affordability for high-cost brand-name drugs. When setting prices, CMS weighs manufacturer data, the availability of alternative treatments, and domestic benchmarks—though, notably, the law does not require Medicare to consider international pricing in its calculations.

GlobalData analyst Cyrus Fan noted in Pharmaceutical Technology that, while the Trump administration has championed both lower prices and MFN policy, the IRA’s negotiation process stands apart. Agreements reached under the IRA do not overlap with MFN deals or direct-to-consumer (DTC) programs, creating a complex landscape where prices can vary between negotiation frameworks. For instance, while Novo Nordisk’s MFN agreement yielded a lower price for Ozempic and Wegovy, other drugs like Pfizer’s Ibrance were not included in MFN but saw steep cuts under the IRA.

CMS Administrator Mehmet Oz, MD, emphasized the improved outcomes this year, stating, “Using the same process with a bolder direction, we have achieved substantially better outcomes for taxpayers and seniors in the Medicare Part D program—not the modest or even counterproductive ‘deals’ we saw before.” The Biden administration’s first round of negotiations in 2024 was projected to save taxpayers $6 billion, with $1.5 billion in direct savings for patients in 2026.

Looking Ahead: Medicaid Innovations and Future Negotiations

While the Medicare price cuts headline the IRA’s achievements, CMS is also targeting Medicaid drug costs. In 2026, the agency plans to launch the GENEROUS Model—a pilot designed to help states buy medications at prices closer to those paid by other countries. The goals: decrease Medicaid spending, improve health outcomes, and strengthen the program’s overall sustainability. With gross Medicaid prescription drug spending topping $100 billion last year—a $10 billion jump from 2022—these efforts could have a significant ripple effect.

Meanwhile, the IRA’s negotiation engine isn’t slowing down. A third round of drug price talks is slated for February, when another batch of 15 drugs—including hospital-administered therapies—will be put under the microscope. The question remains: Will these negotiations continue to yield ever-better deals for patients, or will the complexities of competing policies dilute their impact?

The MFN Policy Debate: Where Do We Go From Here?

The interplay between IRA-negotiated prices and MFN agreements is generating more questions than answers. While the two frameworks operate independently, the fact that certain drugs appear in both negotiations highlights a broader tension in US drug pricing policy: how to ensure the lowest possible cost for patients without undermining incentives for pharmaceutical innovation. Experts like Cyrus Fan caution that the long-term effects of these overlapping policies remain to be seen.

For now, the message from CMS and the administration is clear: they are committed to using every available tool to lower healthcare costs for seniors and the disabled. As these reforms take effect, millions stand to benefit from more affordable medications—though the path to lasting change in drug pricing remains as complex and contested as ever.

Analysis: The second round of IRA negotiations marks a historic moment in US healthcare, delivering unprecedented savings for patients and taxpayers. Yet, the existence of parallel MFN agreements and evolving Medicaid reforms means the story is far from over. The coming years will test whether these price cuts can be sustained—and whether the US can balance affordability with innovation in the pharmaceutical sector.