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2026 Medicare Part D Costs & Drug Price Negotiations

Medicare Part D (the prescription drug benefit) has seen some major changes recently. For 2026, several provisions are coming into play that affect what enrollees pay, how much Medicare pays, and how drug prices are negotiated. Below are the key updates to the 2026 Medicare Part D costs.

Key Changes in Medicare Part D for 2026

Here are some of the most important cost‐related changes that beneficiaries should know:

What Is the Drug Price Negotiation Program

Under the Inflation Reduction Act of 2022, Medicare now has the power to directly negotiate prices for certain high-cost drugs covered under Part D (and later also Part B). Previously, Medicare was more restricted in its ability to force manufacturers to lower prices for prescription drugs.

Here’s how the negotiation program works in broad strokes:

• Each year, a certain number of “single-source” brand drugs (i.e. those without generics or biosimilars) that have been on the market for a set minimum time become eligible for negotiation.
• Medicare (through CMS) makes an initial offer (“maximum fair price” or MFP) based on drug spending, clinical benefit, manufacturer costs, price in comparable drugs, etc. Manufacturers can counter. There are meetings and data sharing to arrive at a negotiated price.
• If agreement is reached, the negotiated price becomes effective as of a certain date. For the first set of drugs, prices begin for 2026

Watch a quick YouTube video on the Medicare Prescription Payment Plan

Which Drugs & Savings with Negotiation in 2026

• The first round of negotiation selects 10 Part D drugs.
• For 2026, these negotiated prices go into effect starting January 1, 2026.
• The discounts negotiated are substantial: for those 10 drugs, reductions range from 38% to 79% off list price.
• Estimated savings: If those new prices had been in effect earlier (e.g. in 2023), Medicare would have saved about $6 billion in overall drug spending on those drugs. For beneficiaries, out-of-pocket savings for those 10 drugs in 2026 are projected to be about $1.5 billion.

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How Negotiations & Costs Interact: What This Means for Beneficiaries

• Lower list/transaction prices for selected drugs should directly reduce what beneficiaries pay (especially in the initial and gap phases), because coinsurance or cost sharing is often a percentage of drug cost.
• The out-of-pocket cap ($2,100 in 2026) limits how high total costs for drugs can go in a year, making unexpected high drug bills somewhat more predictable.
• The negotiation program may also influence which drugs are placed on formularies or on preferred tiers, as plans respond to the new negotiated prices.
• However, the savings from negotiated drugs apply only to those drugs selected for negotiation; many other drugs will still be under traditional pricing structures.

Some Caveats & Things to Watch

• The negotiated max fair price is not always simply a percentage cut—there are statutory minimum discounts, comparisons with existing net prices, evaluation of alternatives, etc. Some drugs may see smaller reductions depending on existing rebates or other discounts.
• The program phases in over years: more drugs will be subject to negotiation in 2027, 2028, etc. So the full effects take time.
• Courts and industry challenges may affect implementation or enforcement.

Stay up-to-date on agent events and information

For 2026, people with Medicare should expect higher costs including; premiums, deductibles and out‐of‐pocket thresholds compared to previous years. Although there will be relief for certain high‐cost drugs thanks to the new Medicare drug price negotiation program. If you’re taking one of the drugs selected for negotiation, the discounts will reduce what you pay. Over time, broader negotiation and other reforms aim to make more drugs more affordable for all Part D enrollees.

Most Medicare agents have spent time explaining Medicare Part D deductibles to their clients. Many part D plans have a deductible. We will go over deductibles and how they impact the cost of your client’s prescription medications.

Medicare Part D

Part D (PDP) coverage is provided by private insurance companies that are approved by Medicare. Individuals enrolled in Medicare Part A and/or Part B who do not have other creditable coverage should enroll in a Part D plan. Even if the beneficiary does not currently take any prescription medications. Delaying part D enrollment for a period of 63 or more days causes the beneficiary to pay a late enrollment penalty.

If the beneficiary is Medicare eligible but has other creditable prescription coverage, they will not incur a penalty. The penalty lasts as long as the beneficiary has Part D coverage. Once a beneficiary is eligible for Medicare coverage, it is very important to enroll in a PDP plan.

Part D Deductibles

A deductible is the amount beneficiaries pay out-of-pocket for prescriptions before their Part D plan begins to share the costs. In other words, it is a threshold that is met before plan coverage kicks in. Once the enrollee pays the deductible, they generally pay a copay or coinsurance for prescription medications, with the PDP plan covering the remaining costs.

How Part D Deductibles Work

The specifics of Medicare Part D deductibles vary depending on the plan each individual chooses. Here are the key points clients should understand:

Annual Deductible

Most Part D plans have a deductible. The deductible is an annual amount, which can change each year. In 2024, the maximum deductible allowed by Medicare is $545. Some plans have lower deductibles, and a few may not even have a deductible at all. When this is the case, the coverage starts immediately.

Meeting the Deductible

The beneficiary must pay for the full cost of prescriptions until they pay the annual deductible amount. Once this threshold is met, the plan covers its portion of the prescription drug costs. The exact amount enrollees pay after meeting the deductible depends on each plan’s structure. Each plan has a specific co-pay or coinsurance amount depending on the plan’s formulary.

Formulary Tiers

Medicare Part D plans categorize drugs into different tiers. Each tier has a different cost associated with it, and generally, drugs on lower tiers (like generic medications) cost less than those on higher tiers (like brand-name or specialty drugs). The deductible may apply differently depending on the tier, and some plans might waive the deductible for drugs in certain tiers (usually tier 1 and sometimes tier 2 as well).

Changes in Part D coverage

It’s important to review PDP plan options each year during the Medicare Open Enrollment Period (October 15 to December 7). PDP plans can change their deductibles, drug formularies, and coverage, therefore it is imperative to ensure your client’s plan still meets their needs.

How deductibles impact plan cost

The deductible is one part of the overall cost of any Medicare Part D plan. Here are the ways it can impact the enrollees’ expenses:

Higher Deductibles

In most cases, plans with higher deductibles have lower monthly premiums. These plans may be a good choice for individuals who do not have prescription medications of whose medications are inexpensive (tier 1 or 2).

Lower Deductibles

Generally, plans with a low or no deductible have higher premiums. These plans can actually be more cost-effective for enrollees who require regular, expensive medications.

Managing the deductible

1. Compare plans: Our agents should use either Connecture or Sunfire to enter the client’s medication information and compare the costs of the Part D plans that are avialable. There are several things that contribute to the plan costs; deductibles, premiums, copays and coinsurance for each specific medication. Click here to watch a Sunfire demo on our YouTube channel.
2. Review all medications: Check the client’s current medications are covered by the plan’s formulary and what tier they are on. This can significantly affect out-of-pocket costs.
3. Apply for Extra Help: If the beneficiary has limited income and resources, they may qualify for Extra Help. This is also referred to as a Low-Income Subsidy, which helps pay for Medicare Part D premiums, deductibles, and co-pays.

Understanding Medicare Part D deductibles is an important part of managing prescription drug costs effectively. Agents should explain this to every PDP client and help them choose a plan that fits their healthcare coverage needs as well as their budget. An annual review of plan coverage allows clients to make any neccessary adjustments to their coverage and optimize coverage and minimize costs.

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