Medicare Drug Price Negotiation Year Two | Simplefill
One of the most important achievements of the Biden administration was the Inflation Reduction Act (IRA) of 2022. Among the act’s many provisions was one that gave Medicare the power to negotiate drug prices for certain medications via the Medicare Drug Price Negotiation Program (DPNP).
As this program enters its second year, how has it affected drug prices? Learn more about Medicare price negotiations and how they might affect what you pay at the pharmacy.
How Does the Medicare Drug Price Negotiation Program Work?
The DPNP grants Medicare the right to negotiate directly with pharmaceutical companies regarding the costs of certain medications. If it works as intended, this should lower the prices of some of the most expensive drugs covered under Medicare Part D, making it easier for people to access the medications they need.
Which Drugs Were Selected for the DPNP?
Ten drugs were selected for the DPNP in 2023. They were chosen based on their high prices and the lack of available generic alternatives. This first round included drugs that helped people with diabetes, blood clots, autoimmune conditions, cancer, and heart failure.
A second round of 15 drugs was chosen in 2024. The lower prices for these drugs will come into play in 2027.
As of Year Two, Is the Medicare DPNP Working?
The Congressional Budget Office estimates that the program will reduce the net price of the chosen drugs by as much as 50%. This could mean savings of $100 billion by 2031. But is the program doing what it’s intended to do?
The second round of price negotiations is already underway, but it’s still unclear whether the program is helping people afford their medications more easily. It’s also not yet known whether it will be able to generate the savings needed to fund other provisions of the IRA, including the new out-of-pocket drug spending cap.
What’s the Impact of the Medicare DPNP on Innovation?
Some have raised concerns about whether the DPNP may impact pharmaceutical innovation. It is not yet clear how capping the price of high-cost drugs will impact research, but the worry is that reduced profit margins will prompt companies to spend less on research and development of new medications, especially for rare diseases.
This could lead to fewer available medications and could prompt pharmaceutical companies to increase prices at launch or even delay bringing new medications into the U.S. market. These potential downsides could have catastrophic results for the American public.
What Are the Concerns About Cost-Sharing Requirements Related to the Medicare DPNP?
The IRA requires that Medicare Part D plans cover all medications the DPNP has targeted. The worry, however, is that Part D sponsors will try to steer patients away from the targeted medications and offer higher-cost alternatives by relying on formulary tier placement.
Will Independent Pharmacy Access Be Impacted by the Medicare DPNP?
Yet another concern regarding the program is whether the targeted drugs will be available to patients via independent pharmacies. The worry is that these pharmacies might not stock DPNP-targeted medications because manufacturers may sell them at rates that are higher than the negotiated prices.
The manufacturer then has to reimburse the pharmacy for the difference. For larger pharmacies, this isn’t a problem, but for smaller ones, it could create a cash flow issue.
Get Affordable Access to Prescription Medications
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Apply today by calling 877-386-0206. A caring Simplefill representative will contact you within 24 hours to discuss your application and, if qualified, enroll you in the program.
Frequently Asked Questions
Learn more about the DPNP.
When Will We Know What the New Drug Prices Will Be For the Next Round?
The Centers for Medicare & Medicaid Services (CMS) announced the rates for 2027 in November 2025. Justifications for those prices will become available in March 2026. At that time, CMS will provide more information on what drugs the program is targeting and how the rates were negotiated.
Will Most-Favored-Nation Pricing Impact the DPNP?
Some believe that President Trump’s executive order requiring pharmaceutical companies to offer most-favored-nation pricing to the American people could impact the effectiveness of the DPNP, perhaps even rendering it unnecessary.
Are Any Pharmaceutical Companies Exempted From the DPNP?
Small biotech companies could be exempted from the DPNP, but most manufacturers are not.
Instead, certain types of medications are not eligible for price negotiation under the program. These include orphan drugs, which are designed for single, rare diseases and conditions, as well as plasma-derived products. Additionally, biosimilar and generic drugs are not impacted by the DPNP.
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