On November 25, 2025, the Centers for Medicare & Medicaid Services (CMS) announced the negotiated Maximum Fair Prices (MFPs) for the 15 selected Medicare Part D drugs for initial price applicability year 2027 under the Medicare Drug Price Negotiation Program (Negotiation Program). These 15 selected drugs include big-ticket medications, such as the GLP-1 drugs Ozempic and Wegovy, as well as other medications used to treat diabetes, cancer, and other chronic conditions. CMS estimates that these prices will save Medicare about $12 billion in net covered drug costs and will save beneficiaries an estimated $685 million in out-of-pocket costs under the standard Part D benefit.
The Negotiation Program was established by the Inflation Reduction Act of 2022 (IRA), and signed into law by President Joe Biden, but the Trump Administration has attempted to build on President Biden’s IRA through a number of drug pricing policies:
- Executive Order: On April 15, 2025, President Trump issued a sweeping executive order, which, among other policies, aims “to improve the Inflation Reduction Act”, implement a payment model “to obtain better value for high-cost prescription drugs”, streamline drug importation processes, and impose tariffs on manufacturers who do not agree to build manufacturing plants in the United States.
- TrumpRX: In October, 2025, the Trump Administration launched TrumpRx.gov, a government-operated website where individuals can directly purchase certain drugs—without using insurance–from participating manufacturers at discounted prices.
- GLP pricing negotiations: On November 6, 2025, the Trump Administration announced agreements with manufacturers Eli Lilly and Company and Novo Nordisk, to commit to reducing the prices for certain medications, including Ozempic and Wegovy, when purchased through TrumpRx.gov.
- New Demonstration Model: On November 6, 2025, Centers for Medicare & Medicaid Innovation (CMMI) announced a new voluntary five-year GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) model, which aims to test an approach, in which manufacturers that participate in the Medicaid Drug Rebate Program (MDRP) provide supplemental rebates to state Medicaid agencies that result in MFN pricing for covered outpatient drugs.
The passage of the Inflation Reduction Act, which included policies to negotiate Medicare drug prices, redesign the Medicare Part D standard benefit, and apply penalties for manufacturers who raise prices at a rate faster than inflation, took major steps to improve drug price affordability for both the federal government and consumers. The proposed Trump-era initiatives appear to a be an effort to continue to reduce drug prices in the United States. However, many remain skeptical on whether true price reductions and affordability will be achieved from these Trump Administration efforts. This blog examines these recent drug pricing actions and whether these actions will improve the affordability of prescription drugs.
TrumpRx
The November 6, 2025 announcement of new Most-Favored Nation (MFN) agreements with Eli Lilly and Novo Nordisk, including steps to make their GLP-1 products more affordable across markets certainly made headlines. Under the new MFN agreements, Ozempic will be priced at $350 per month on TrumpRx.gov, a significant reduction from its list prices of $1000 per month. The Eli Lilly diabetes medication, Trulicity, will be priced at $389 per month, a nearly $600 price reduction in its list price. Both manufacturers also agreed to provide state Medicaid agencies with access to MFN pricing. The companies have also committed to investments to expand U.S. manufacturing capacity, with Eli Lilly committing $27 billion in new U.S. manufacturing investments, and Novo Nordisk committing $10 billion in investments.
It remains unclear the extent to which this announcement will improve the affordability of these medications. First, the MFN-agreed prices are being made directly to consumers, but the price reductions are presented in terms of the medications’ list prices, which are the retail prices of the product set by the manufacturer. Typically, the final price made available is much lower after discounts, rebates, and other price concessions. For instance, one study found that average discounts on brand-name drugs in Medicare Part D were about 40 percent of the retail list price. These discounts are much higher in Medicaid, as one Congressional Budget Office (CBO) study found that the total average Medicaid rebate rate is about 77 percent of the retail list price. There may also be additional rebates that the CBO did not account for in the analysis.
It is also important to note how the prices vary between the Trump Administration’s new MFN agreements and the Medicare-negotiated MFP. In the case of the blood thinning medication Eliquis, the Medicare-negotiated MFP of $231 list price is lower than the MFN-agreed upon direct-to-consumer price of $346 for a 30-day supply of the drug. However, CMS recently announced the negotiated MFP for Ozempic of $274 list price for a 30-day supply, which is higher than the MFN-agreed upon direct-to-consumer price, applicable to Medicare Part D plans, of $245 for a 30-day supply of the drug. Although more information may needed to do direct comparisons, including pricing by National Drug Code.
CMMI GENEROUS Model
The voluntary five-year GENEROUS model will test an approach that result in MFN pricing for covered outpatient drugs, would reduce costs for Medicaid programs. The model is limited to single-source drugs and innovator multiple-source drugs and CMS will calculate MFN pricing based on manufacturer-provided data on the average net international prices for the drug (across the United Kingdom, France, Germany, Italy, Canada, Japan, Denmark, and Switzerland). States would then receive the MFN price through a guaranteed net unit price for each covered outpatient drug under the model, which is set to begin on January 1, 2026 and run through December 31, 2030.
Studies have found that prescription drugs in the United States are significantly higher than in other developed countries, with one study finding overall U.S. prices to be about 2.78 times higher, while brand-name drugs are roughly 3.22 times higher in the U.S. than in other comparable nations. A 2019 House Ways and Means Committee report found that Americans pay as much as 67 times more than consumers in other nations for prescription drugs, even when accounting for rebates.
The GENEROUS model only applies to the Medicaid program, which exhibits the largest percent discounts across federal programs, at least 77 percent of the retail list price. The model could lead to larger savings if it applied to other health programs, such as the Medicare program, given that gross Medicare Part D spending is estimated to total $141 billion in 2026 and has grown significantly over the past decade. The Negotiation Program only applies to anywhere from 10 to 20 high-expenditure Medicare Part B or D drugs each year, and so a model testing international drug pricing mechanisms on drugs not subject to the Negotiation Program, could more drastically improve the affordability of drugs to beneficiaries.
Medicare Drug Price Negotiation
CMS began negotiating the first set of 10 high-expenditure Medicare Part D drugs in 2023 and announced negotiated MFPs for those drugs in August, 2024. This first set of drugs provided list price discounts of anywhere from 38 percent (Imbruvica) to 79 percent (Januvia) of the 2023 list price. CMS estimated that these lower prices, which take effect on January 1, 2026, will save $6 billion annually to the Medicare program, after taking into effect the rebates that are already generating net prices lower than list prices. The negotiated prices would also reduce out-of-pocket spending by about $1.5 billion in 2026.
On November 25, 2025, CMS announced negotiated MFPs for the second round of 15 Medicare Part D drugs selected for negotiation, with price discounts ranging from 38 percent (Austedo) to 84 percent (Janumet) of the 2024 list price. CMS estimated even larger Part D savings for these lower prices, which take effect on January 1, 2027, with Medicare Part D savings of $12 billion annually and an estimated $685 million in out-of-pocket savings to Medicare Part D beneficiaries in 2027.
CMS is required by law to announce the next round of 15 Medicare Part B or Part D drugs subject to price negotiation by February 1, 2026. However, this will be the first round of drugs to incorporate newly enacted restrictions for certain orphan drugs, in accordance with the One Beautiful Bill Act (OBBA), which was signed into law by President Trump on July 4, 2025. The IRA excluded certain orphan drugs that are approved to treat a single rare disease or condition, but the OBBA broadened this exclusion, excluding orphan drugs that are designated for multiple rare diseases or conditions. This could mean drugs like the immunotherapy medication Keytruda may not be selected for negotiation, and the CBO has estimated that this provision will result in about $8.8 billion in higher Medicare spending – reducing savings from the Negotiation Program by almost 10% of the estimated $98.5 billion in savings.
Conclusion
Given the historical trend of prescription drug costs, policymakers need to take significant steps to reduce drug prices. Drug prices in the United States far exceed those of comparable countries, and the extent to which the Trump Administration’s actions will reduce drug costs and increase affordability for beneficiaries is unclear. However, it is clear that the Administration has been taking a multi-faceted approach, including voluntary agreements and tariffs. While there are some finer details to iron out, it could be the case that other approaches, such as the one prescribed in S.1753, the End Price Gouging for Medications Act, which would peg U.S. drug prices, across multiple federal programs, at the lowest retail price available in multiple reference countries, would also lead to savings for both federal programs and consumers. Policymakers and stakeholders should consider exploring additional approaches to reduce drug prices and produce savings for taxpayers and consumers.