Medicare drug price negotiations begin in 2026, lowering costs for seniors as Medicaid cuts and expiring ACA subsidies widen a health care divide for Latino families.
A major health care divide is coming in 2026.
Some Americans may finally catch a break on rising costs, as the first negotiated Medicare drug prices go into effect. Others will end up paying more, as Affordable Care Act tax credits expire and Medicaid coverage becomes more uncertain amid drastic cuts in state funding.
The divide is the result of decisions made by the last two administrations. In 2022, President Joe Biden signed the Inflation Reduction Act, which for the first time gave Medicare the authority to negotiate prices on some of its most expensive prescription drugs. And in July, President Donald Trump signed the “big, beautiful bill,” which slashed funding for Medicaid and didn’t extend ACA subsidies.
“If you’re on Medicare, there’s some good news,” said Larry Levitt, executive vice president for health policy at KFF, a nonpartisan research group. “If you’re on the ACA or Medicaid, it may be bad news ahead for you.”
Medicare drug costs
Starting Jan. 1, the first negotiated drug prices will go into effect for people with Medicare. These prices will apply to the 10 costliest drugs in the program, including the blood thinners Eliquis and Xarelto and the diabetes drugs Jardiance and Januvia. The drugs are used by nearly 9 million older adults.
Out-of-pocket costs for the negotiated drugs are estimated to fall next year by more than 50%, on average, according to a report published this month by AARP; seven of the drugs will cost less than $100 per month. A separate estimate from the Centers for Medicare & Medicaid Services projects rolls out will save $1.5 billion in out-of-pocket costs next year.
The Inflation Reduction Act also capped annual out-of-pocket prescription drug spending for Medicare at $2,000 this year, a limit that will rise to $2,100 in 2026. And in 2023, out-of-pocket insulin costs were capped at $35 a month.
The IRA “is truly a historic win for millions of seniors,” Leigh Purvis, the prescription drug policy principal at the AARP Public Policy Institute, said on a recent call with reporters.
Tom Howie, of Flint, Michigan, said the changes have already had a big impact.
The 81-year-old has a long history of heart disease, including multiple heart attacks that led to quadruple bypass surgery in 1997.
In past years, he spent as much as $8,000 out of pocket on prescriptions before reaching Medicare’s so-called catastrophic threshold, which he typically hit around mid-summer. This year, he reached the $2,000 cap by May.
Howie, who lives on a fixed income, currently pays around $121 for a three-month supply of Eliquis, one of the drugs he needs for his heart. He hopes that copay will fall further in 2026.
“It’s a big difference,” he said. “I just get my Social Security, basically, and then I have some money from my 401(k).”
A report published in October by the nonprofit research group the Institute for Clinical and Economic Review found that the average net launch price for 154 new drugs increased 51% over three years, 2022 to 2024, after accounting for inflation and discounts. The drugs on the list included Leqembi, which is used to treat early Alzheimer’s disease, and Casgevy, a gene therapy for sickle cell disease.
“I don’t see any reason to believe that’s not going to at least continue for a bit, until people figure out some sort of policy moves to address that,” Frank said.
A report published in October by the nonprofit research group the Institute for Clinical and Economic Review found that the average net launch price for 154 new drugs increased 51% over three years, 2022 to 2024, after accounting for inflation and discounts. The drugs on the list included Leqembi, which is used to treat early Alzheimer’s disease, and Casgevy, a gene therapy for sickle cell disease.
“I don’t see any reason to believe that’s not going to at least continue for a bit, until people figure out some sort of policy moves to address that,” Frank said.
