For decades, Medicare generally could not negotiate prescription drug prices directly with pharmaceutical manufacturers. That changed when Congress created the Medicare Drug Price Negotiation Program through the Inflation Reduction Act in 2022.
Today, Medicare negotiates prices for certain high-cost prescription drugs covered under Medicare Part D, with additional drugs added over time. The negotiated prices — known as Maximum Fair Prices (MFPs) — are intended to lower costs for Medicare beneficiaries while reducing overall Medicare spending.
In 2026, the U.S. Supreme Court declined to hear appeals challenging the program, leaving lower court decisions in place and allowing the negotiation program to continue. While the legal challenges generated headlines, the more important takeaway for Medicare beneficiaries is that the negotiation program remains in effect.
Key Takeaways
- Medicare now negotiates prices for selected high-cost prescription drugs.
- Negotiated prices apply only to drugs selected by the Centers for Medicare & Medicaid Services (CMS).
- Not every Medicare-covered prescription drug is negotiated.
- CMS adds additional drugs to the program over time.
- Lower negotiated prices may reduce beneficiaries’ out-of-pocket prescription costs, depending on their Medicare Part D coverage.
- The Supreme Court’s decision means the current program continues under existing law.
Prescription drug costs remain one of the largest healthcare expenses for many Medicare beneficiaries.
To help address these costs, in 2022 Congress established the Medicare Drug Price Negotiation Program through the Inflation Reduction Act. For the first time, Medicare can negotiate prices for certain high-cost prescription medications that meet eligibility requirements established by law.
Although the program has faced legal challenges, it continues to move forward. Understanding how it works can help beneficiaries better understand changes that may affect their prescription drug costs.
What Is the Medicare Drug Price Negotiation Program?
The Medicare Drug Price Negotiation Program is administered by the Centers for Medicare & Medicaid Services (CMS).
Each year, CMS selects eligible prescription drugs for negotiation based on criteria established in federal law. Among the factors considered are:
- Total Medicare spending for the drug
- How long the drug has been on the market
- Whether generic or biosimilar alternatives are available
CMS then negotiates a Maximum Fair Price (MFP) with the drug manufacturer. Once the negotiated price becomes effective, Medicare Part D plans use that price when covering the selected medication.
The program is being implemented in phases, with additional drugs becoming eligible for negotiation each year.
Which Medicare Beneficiaries Benefit?
The negotiation program primarily affects people enrolled in Medicare Part D prescription drug coverage.
If your Part D plan covers one of the selected medications, you may benefit from the negotiated price when it becomes effective.
Your actual savings depend on several factors, including:
- Your Medicare Part D plan
- Whether you have met your deductible
- Your plan’s cost-sharing requirements
- Whether you take one of the negotiated drugs
Because every Medicare beneficiary has different prescription needs, savings will vary from person to person.
Are All Prescription Drugs Negotiated?
No. Only certain high-cost drugs that meet the eligibility requirements established by federal law are selected for negotiation. Most prescription medications are not currently included in the program, although CMS adds additional drugs during future negotiation cycles.
What Did the Supreme Court Decide?
After Congress created the Medicare Drug Price Negotiation Program, several pharmaceutical manufacturers filed lawsuits challenging the law. Lower federal courts rejected those challenges. The companies then asked the U.S. Supreme Court to review those decisions. In May 2026, the Supreme Court declined to hear the appeals.
The Court did not issue a decision on whether the law itself was constitutional. Instead, by declining to hear the cases, it allowed the lower court decisions to remain in place, meaning the Medicare Drug Price Negotiation Program continues under current law.
What This Means for Medicare Beneficiaries
For Medicare beneficiaries, the practical effect is straightforward:
- The Medicare Drug Price Negotiation Program remains in place.
- CMS continues selecting additional drugs for future negotiation.
- Negotiated prices already in effect remain available, and additional negotiated prices are scheduled to take effect as future rounds of negotiations are completed.
- Congress could change the law in the future, but under current law the program continues as planned.
Example
Susan is enrolled in a Medicare Part D prescription drug plan and takes a medication selected by CMS for negotiation. When the negotiated Maximum Fair Price becomes effective, her prescription drug plan uses the lower negotiated price when calculating her share of the prescription cost. Depending on her plan design and cost-sharing, Susan may pay less out of pocket than she would have before the negotiated price became available. Actual savings vary based on the medication and the beneficiary’s Medicare Part D plan.
Frequently Asked Questions
Does Medicare negotiate prices for every prescription drug?
No. Medicare negotiates prices only for selected drugs that meet the eligibility requirements established by federal law.
Does this affect Original Medicare?
The program primarily affects prescription drugs covered under Medicare Part D. Starting with drugs selected in 2026, the program now also includes certain Medicare Part B drugs, with those negotiated prices taking effect in 2028.
Can Congress change the program?
Yes. Because the Medicare Drug Price Negotiation Program was created through federal legislation, Congress may amend or repeal the law in the future.
Does the Supreme Court decision prevent future legal challenges?
No. The Supreme Court simply declined to review the appeals that were before it. Future legal challenges or legislative changes remain possible.