2026 Medicare Part D formulary tier reassignments for Jardiance and Farxiga following CMS’s negotiated price implementation and insulin cap adjustments

2026 Medicare Part D formulary tier reassignments for Jardiance and Farxiga following CMS’s negotiated price rollout and insulin cap shifts

Scenario overview

Medicare Part D is heading into a major reset in 2026. The first negotiated drug prices under the Inflation Reduction Act (IRA) will kick in on January 1, 2026, changing how plan sponsors handle high-cost therapies on formularies. Two drugs especially in focus: Jardiance (empagliflozin, from Boehringer Ingelheim and Eli Lilly) and Farxiga (dapagliflozin, from AstraZeneca). Both are SGLT2 inhibitors used for type 2 diabetes and certain forms of heart failure and chronic kidney disease, and both sit among Medicare Part D’s highest spenders.

In August 2023, CMS published its initial list of ten drugs selected for negotiation under the IRA’s Medicare Drug Price Negotiation Program. Jardiance made the cut. Farxiga didn’t in the first round, but its market share and overall Medicare spend make it a strong candidate for a later cycle. In 2022, Jardiance alone accounted for roughly $4.9 billion in Medicare Part D gross spending, while Farxiga came in at more than $2.4 billion, per CMS data.

Current formulary status (as of 2024)

Before negotiation enters the picture, both drugs usually appear on Tier 3 (preferred brand) for most Part D plans. A smaller number place them on Tier 2 if rebate structures justify it. With other SGLT2 competitors around, Invokana (canagliflozin) and Steglatro (ertugliflozin), for example, plans often pick one preferred product per tier, or they just require prior authorization across the board. Market behavior, as of April 2024, looks like this:

*Preferred status means the plan lists the drug as preferred brand without prior authorization. Source: CMS 2024 Part D Formulary Public Use File, December 2023.

How CMS negotiation will alter 2026 pricing

The IRA’s negotiated drug prices will start in 2026. For those selected, CMS establishes a Maximum Fair Price (MFP), essentially the most a plan can pay a manufacturer. The MFP reflects how long a drug has been on the market and what therapeutic alternatives exist. Even though specific numbers stay under wraps until September 2024, analysts tracking CBO models expect negotiated reductions somewhere between 25% and 60% off current net prices.

Once that price lands, Jardiance’s 2026 MFP will ripple through plan tiering decisions. Plan sponsors and PBMs can reassess where Jardiance fits in the SGLT2 lineup. Farxiga, still outside the negotiation window, will probably need higher rebates to hold its footing if Jardiance’s baseline drops sharply.

Looking ahead: possible tier changes for 2026

Most Medicare Part D formularies use five tiers: preferred generic, non-preferred generic or preferred brand, non-preferred brand, specialty, and non-preferred specialty. In 2024, Jardiance and Farxiga sat in Tier 3. Once the negotiated price kicks in, expect one of a few paths depending on sponsor strategy. The table below sketches the likeliest versions:

Insulin caps and spillover effects

The $35 monthly insulin cap under the IRA continues through 2026 and now interacts with the new price ceilings. Jardiance and Farxiga aren’t insulins, but plan behavior for diabetes drugs ties together. With insulin out-of-pocket costs capped, sponsors lose some manufacturer funding streams, which nudges them to squeeze non-insulin categories. Some SGLT2 drugs may slide off preferred slots to offset those losses.

According to CMS (2024), about 3.4 million beneficiaries used insulin under Part D in 2022, just 7% of enrollees but near 15% of spending. Holding the cap without new subsidy dollars puts pressure elsewhere. That’s where negotiated drugs like Jardiance give plans a release valve if the MFP lands well below current rebates.

Patient-level changes: access and coinsurance

Beneficiaries feel tier shifts directly through out-of-pocket costs. The redesigned 2025 benefit caps annual Part D spending at $2,000, which helps, but not evenly across tiers. In 2024, a Jardiance 25 mg daily prescription sat around $45-$60 per month under Tier 3, per KFF estimates. If moved to Tier 2, that could drop to roughly $25-$35 depending on plan math. Farxiga might stay put at the higher range if it doesn’t get new preferred status. Pharmacies will need to notify prescribers once plan data for 2026 publish in fall 2025, expect a lot of “can we switch this to Jardiance?” calls.

What plan and pharmacy teams need to line up

Pharmacists should anticipate substitution requests early in 2026 as beneficiaries move to plans reflecting negotiated prices. CMS lets substitutions go through if clinical equivalence and prescriber approval are documented. Teams should keep templated messages ready; this isn’t one-off work.

On the administrative side, plan sponsors must sync pricing data with CMS before open enrollment. Because MFP is national, Jardiance copays will look more consistent plan to plan, while Farxiga’s position might still depend on late-cycle rebate contracts. Bids lock with CMS by June 3, 2025. That doesn’t leave much runway for modeling the combined insulin cap and MFP adjustments. Look, any actuary reading this knows what that week in May feels like.

Longer-term signals

CMS will negotiate up to fifteen drugs in 2027 and another fifteen in 2028. If Farxiga joins, price alignment will likely follow, closing the gap inside the SGLT2 inhibitor class. PBMs may start creating unified “preferred diabetic care” tiers that bundle SGLT2s, GLP-1s, and DPP-4s to simplify member cost-sharing. Until that happens, Jardiance’s 2026 position will serve as the first real test of negotiated pricing’s ability to move market alignment in Medicare Part D.

For patients, formulary shifts matter as much as the raw price. Preferred brand placement affects deductible timing, LIS copays, and catastrophic coverage. Beneficiaries should recheck plan options each fall through the Medicare Plan Finder once 2026 data land, probably October 2025. Then decide if a switch makes sense. Don’t just auto-renew next time.

Quick comparison: estimated 2026 view

What’s next to watch

On September 1, 2024, CMS will release the finalized MFPs for all initial negotiated drugs. That’s the day actuaries start their serious 2026 bid testing. Updated formulary reference files should appear by October 2025, followed by public analyses on savings later in 2026 from CMS and KFF. So watch that September release like a hawk; it’ll set the tone for every SGLT2 negotiation afterward.

No steps for patients yet. Clinicians and pharmacists should begin prepping materials before 2026 open enrollment, especially around how substitution rules apply between Jardiance and Farxiga. Keeping adherence steady and minimizing cost shocks, that’s the goal here, even if the paperwork never stops.

Disclaimer: Informational and policy analysis only. Not medical, legal, or insurance advice. Patients should talk with their providers and plan sponsors for individual coverage details and clinical guidance.