Prescription Drug Prices: Medicare Negotiation, Price Caps, and Insulin
Since 2022, Medicare has been allowed to negotiate prices for some high-cost drugs, and seniors now have caps on insulin and yearly drug costs. Voters disagree about whether the government should set or negotiate more drug prices, or rely on competition and private deals instead.
The basics
The Inflation Reduction Act of 2022 gave Medicare the power to negotiate prices directly with drugmakers for some high-spending drugs1. The law passed with no Republican votes4.
The first negotiated prices, for 10 drugs, took effect on January 1, 20261. Prices for 15 more drugs, including Ozempic and Wegovy, take effect on January 1, 20271. In January 2026, federal officials picked 15 more drugs for prices starting in 2028, the first round to include drugs given in a doctor's office under Medicare Part B2.
The same law capped insulin at $35 a month for people on Medicare starting in 20233. It also capped yearly out-of-pocket drug costs for Medicare drug plans at $2,000 in 2025, which rose to $2,100 in 2026 with an inflation adjustment11. These caps do not apply to most private insurance3.
Drugmakers sued to stop negotiation. On May 18, 2026, the U.S. Supreme Court declined to hear their appeals, leaving lower court rulings in place that upheld the program4. A 2025 federal budget law widened an exemption for drugs that treat rare diseases, which the Congressional Budget Office estimated would cost about $8.8 billion over ten years1.
Separately, the current administration has signed voluntary "most favored nation" pricing deals with 26 drugmakers, meant to bring U.S. prices in line with the lowest prices in other wealthy countries56. It launched a discount website, TrumpRx.gov, on February 5, 20265. Many details of the company agreements have not been made public6.
The 2024 Democratic platform called for adding more drugs to negotiation and extending the $35 insulin cap and the yearly drug cost cap to every American9. The 2024 Republican platform pledged to increase transparency, promote choice and competition, and expand access to affordable prescription drug options10.
Key terms
- Medicare drug price negotiation
- A process created in 2022 in which Medicare bargains with drugmakers over the price it pays for selected high-cost drugs1.
- Part D and Part B
- Part D covers drugs people pick up at a pharmacy; Part B covers drugs given in a doctor's office or clinic. Part B drugs join negotiation starting with 2028 prices2.
- Out-of-pocket cap
- A yearly limit on what a Medicare drug plan member pays for covered drugs: $2,000 in 2025 and $2,100 in 202611.
- Most favored nation pricing
- A pricing approach that ties U.S. prices to the lowest price paid in other developed countries; in 2025 and 2026 it has been pursued through voluntary company deals56.
- Orphan drug exemption
- A rule that keeps certain drugs for rare diseases out of negotiation; it was expanded by a 2025 federal law1.
In Texas
Texas passed Senate Bill 827 in 2021, capping insulin copays at $25 for a 30-day supply for plans issued or renewed on or after January 1, 20227. It covers only state-regulated plans, such as fully insured job-based plans, individual marketplace plans, and state employee plans; about 16% of Texans had state-regulated plans when it passed812.
People in self-funded employer plans, which face much less state regulation, may not be protected by the state cap12. Medicare members fall under federal rules instead, so for them the federal $35 insulin cap and yearly out-of-pocket cap apply311.
How people see it
The strongest case for each view, in terms its supporters would recognize. We don't pick a side.
End Medicare negotiation, let the market work
Supporters say government price setting cuts the revenue that pays for research, so fewer new cures get made. Drugmakers argued in court that lawmakers should instead rein in insurers and pharmacy middlemen, which they say drive up what patients pay.
Competition and transparency first
Supporters want faster approval of generics, clear price information, and limits on pharmacy benefit managers rather than more federal price setting. They argue more choice and competition lowers prices without discouraging new medicines.
Keep current negotiation as is
Supporters point out that courts have upheld the program and that it is producing savings for Medicare and seniors. They favor letting the current law and caps play out before expanding or cutting it.
Expand negotiation and caps
Supporters want Medicare to negotiate more drugs each year and to extend the $35 insulin cap and the yearly drug cost cap to people with private insurance. They argue Americans pay far more than people in other countries for the same drugs.
Government price limits on all drugs
Supporters say drug prices should be tied to what other wealthy countries pay, by law and for every buyer, not through voluntary deals or a few selected drugs. They argue medicine is a necessity, and market pricing has not kept it affordable.
Who decides
- U.S. Congress: Writes and can change the negotiation law, the insulin and out-of-pocket caps, and exemptions.
- President and U.S. Department of Health and Human Services (CMS): Picks drugs, runs negotiations, and makes voluntary pricing deals with drugmakers.
- Federal courts: Decide lawsuits over whether the negotiation program is legal.
- Texas Legislature and Governor: Set cost-sharing rules, like the insulin cap, for state-regulated health plans.
- Texas Department of Insurance: Enforces state insurance rules on covered plans.
Questions to ask a candidate
- Should Medicare negotiate prices for more drugs each year, fewer, or none?
- Should the $35 insulin cap and yearly drug cost cap apply to people with private insurance?
- Should drug pricing deals with companies be written into law and made public?
- Should Texas extend its $25 insulin cap or add other drug cost limits to more plans?
Last reviewed 2026-09-26. Spotted something wrong? Every claim links to its source so you can check it yourself.
Sources
- Key Facts About Medicare Drug Price NegotiationKFF
- CMS Announces Selection of Drugs for Third Cycle of Medicare Drug Price Negotiation ProgramCenters for Medicare & Medicaid Services
- The Facts About the $35 Insulin Copay Cap in MedicareKFF
- Supreme Court rejects appeals from drug manufacturers over Medicare price negotiationsPBS NewsHour (Associated Press)
- Fact Sheet: Deal with Nine Additional Pharmaceutical ManufacturersThe White House
- Trump says more drug companies agree to voluntarily lower drug pricesSTAT
- SB 827, Enrolled Version (87th Legislature)Texas Legislature Online
- New State Law Keeps Insulin Affordable, But Only For 16% Of TexansKERA News
- 2024 Democratic Party PlatformThe American Presidency Project
- 2024 Republican Party PlatformThe American Presidency Project
- Final CY 2026 Part D Redesign Program InstructionsCenters for Medicare & Medicaid Services
- Texas Legislature caps insulin price at $25 a month for the insuredCommunity Impact