Medicare Part D Drug Costs Will Be Based on Net Price, Not Sticker Price, Starting 2026

The “Reducing Drug Prices for Seniors Act” is taking aim at one of the most frustrating parts of prescription drug coverage for seniors: the sticker shock. This bill mandates a crucial change in how out-of-pocket costs are calculated under Medicare Part D, specifically for the period between meeting your annual deductible and hitting your out-of-pocket maximum. Starting with plan years beginning on or after January 1, 2026, the coinsurance you pay—that percentage of the drug cost—must be based on the drug’s net price, not the usually much higher list price.

The List Price vs. Net Price Reality Check

To understand why this matters, think of the list price as the price tag on a new car, and the net price as the actual price you pay after all the dealer incentives, rebates, and trade-ins are factored in. Currently, many Part D plans calculate your coinsurance using the inflated list price, even though the plan itself only pays the lower net price after receiving rebates from the manufacturer. This bill (Sec. 2) defines the net price as the negotiated price minus any discounts or rebates provided by the manufacturer. This means if a drug has a $500 list price but the plan negotiated a $300 net price after rebates, your 20% coinsurance would be based on $300 ($60) instead of $500 ($100). That’s a significant difference for a senior on a fixed income managing multiple prescriptions.

How This Rolls Out for Everyday Users

This change is designed to directly lower the burden on Medicare beneficiaries, especially those with high-cost or specialty medications. Imagine a retired teacher who takes a brand-name drug that costs thousands annually. Under the current system, they might hit the cost-sharing phase and still face hefty coinsurance payments based on the drug’s bloated list price. This new rule ensures that their cost-sharing reflects the actual cost of the drug to the insurer, saving them money when they need it most. The bill requires that the net price figure be based on data reported in the Detailed DIR Report from the previous plan year, which adds a layer of transparency, even if it creates a slight delay in the data used for the calculation.

The Fine Print and Potential Hurdles

While this is a clear win for seniors, it’s worth noting the implementation details. The bill specifically excludes certain covered Part D drugs that are already handled under existing specific rules (referenced in paragraphs (8) or (9) of the relevant section). Depending on which drugs those are, some high-cost medications might not immediately benefit from this change. Furthermore, Part D plans and drug manufacturers will need to adjust their contracts and reporting systems to comply with the 2026 deadline. This shift effectively forces insurers to pass on the benefit of those manufacturer rebates directly to the consumer at the pharmacy counter, rather than keeping the savings to reduce premiums or other costs later. For the average person, though, the bottom line is lower out-of-pocket costs when filling prescriptions.