The 2022 Inflation Reduction Act (IRA) enacted major changes to the Part D program that have reduced Medicare prescription drug spending for both beneficiaries and the Medicare program itself. Beneficiaries should be aware of enhancements to the Part D program – some new in 2026, some continuing on from previous years – that can help them save on prescription drug costs.
The First 10 Negotiated Drug Prices went into effect January 1, 2026
In January 2026, the first round of negotiated drug prices went into effect through a provision in the IRA that allowed Medicare to negotiate drug prices for the first time in the program’s history. This first round of 10 commonly prescribed medications that treat conditions including heart disease, diabetes, arthritis and cancer, accounted for about 20% percent of Part D spending at the time the negotiations were made in 2023. The discounts to the drug prices range from 38-79% off the 2023 list prices for a 30-day supply. According to CMS fact sheet, 8.8 million Medicare beneficiaries were prescribed at least one of these drugs in 2023. CMS estimates the reduction in price of this first round of drugs will net a savings of about $1.5 billion for beneficiaries and $6 billion to the Medicare program overall.
2026 Maximum Out-of-Pocket Threshold for Covered Drugs: $2,100
Probably the most impactful change the IRA made to the Part D program in terms of direct savings for beneficiaries were the major reductions in out-of-pocket cost-sharing liability for covered drugs. In addition to eliminating cost-sharing in the catastrophic phase altogether, the IRA drastically reduced the out-of-pocket cost-sharing threshold in the initial coverage phase as part of its measures to redesign the Part D benefit. In 2025, the IRA reduced that threshold to $2,000. In 2026, the out-of-pocket threshold for cost-sharing in the initial coverage phase is $2,100, an adjustment based on the annual percentage increase in average Part D expenditures by Part D enrollees from the previous year.
Medicare Prescription Payment Plan Enters its 2nd Year
The Medicare Prescription Payment Plan (MPPP) enters its second year of implementation, allowing beneficiaries to spread the costs of their prescriptions over the course of the year into a lower, more predictable payment. While the MPPP does not reduce a beneficiary’s out-of-pocket liability, the program can be a very helpful option for beneficiaries who cannot afford to pay the full cost-sharing up front for expensive medications while in the deductible or initial coverage phases.
For example, if a beneficiary cannot easily afford to make a $700 copayment in January toward an expensive covered medication, they can sign up for the MPPP and spread that $700 copayment over the course of 12 months instead. Beneficiaries can sign up for the MPPP directly through their Part D plan (including Medicare Advantage Plans with Prescription Drug Coverage), and can disenroll and re-enroll in the MPPP at any point during the year. Beneficiaries enrolled in the MPPP make payments for their medications directly to their Part D plan, instead of the pharmacy.
Other Part D cost-saving provisions from the IRA that are continuing from previous years into 2026 include:
- No cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP)
- Cost-sharing for month supply of covered insulin is capped at no more than the lesser of $35 or 25 percent of the negotiated price
March 19, 2026 – M. Lambert