How 2026 Medicare Part D Formularies Are Repositioning Keytruda and Opdivo After CMS’s First Oncology Drug Price Negotiation Round

2024: The Build-Up to Oncology Negotiation

Before 2025, immune checkpoint inhibitors such as pembrolizumab (Keytruda, Merck) and nivolumab (Opdivo, Bristol Myers Squibb) sat firmly in the highest specialty tiers under Medicare Part D. These agents treat multiple advanced cancers, melanoma, lung, bladder, and others, and by 2024 each topped $3 billion in annual Medicare spending, according to CMS data. Clinically, they were non‑negotiable for oncologists, but financially? Plan sponsors had little, no biosimilars, limited substitutes, and beneficiaries paying 33% or more in coinsurance per infusion. Brutal.

2025: CMS Finalizes the First Negotiated Price List

In August 2025, CMS published the first set of negotiated drug prices under the Inflation Reduction Act. Among the ten products chosen, two oncology biologics made the cut: Keytruda and Opdivo. The new prices would take effect January 1, 2026, and the announcement immediately sent PBMs and plan sponsors back to their spreadsheets. Rebate strategies, tier placements, the whole pricing architecture, everything had to move.

Under the IRA rules, negotiated prices apply directly to Part D plans. Manufacturers declining to accept them face punishing excise taxes. For beneficiaries, this meant a clearer ceiling on out‑of‑pocket costs and significant relief once catastrophic spending hit. CMS indicated that across all ten drugs, negotiated reductions averaged 25-60% relative to 2025 net prices, with oncology products parked closer to the 25% end because of their clinical weight. We don’t have every number yet, but the direction was obvious.

Late 2025: Plan Sponsors Adjust Their Formularies

During late‑2025 filings, plan sponsors started reshaping formularies in anticipation of the new 2026 rates. Specialty Tier‑1 and Tier‑2 categories were rebuilt to make room for negotiated oncology drugs. Some enhanced plans moved Keytruda and Opdivo into a new “Preferred Specialty” or “Negotiated Oncology” tier, lower coinsurance but tighter prior authorization. CMS had already nudged carriers not to use step therapy when no biosimilar existed, so many removed those edits entirely. Messy work, but overdue.

Drug Generic Name Manufacturer 2025 Typical Tier 2026 Projected Tier Average Coinsurance
Keytruda Pembrolizumab Merck & Co. Specialty Tier 5 Preferred Specialty / Negotiated Oncology Tier 33% → 15-20%
Opdivo Nivolumab Bristol Myers Squibb Specialty Tier 5 Preferred Specialty / Negotiated Oncology Tier 33% → 17-22%

January 2026: Negotiated Prices Go Live

When the clock hit January 1, 2026, those new prices became real. Pharmacies inside Part D networks processed claims using CMS’s maximum fair prices. Infused drugs technically remain Part B products, but the storage and preparation components that fall under Part D had to sync. For a few chaotic weeks, billing systems didn’t. CMS pushed out transition guidance before the end of the quarter to clean it up.

For patients, relief came quickly. A typical enrollee on a standard Part D plan might save roughly $1,000 a month on Keytruda once the IRA’s $2,000 annual cap and negotiated unit cost take hold together. PBMs reported thinner rebate flows because the IRA barred post‑negotiation side deals. For once, the savings moved more directly to patients than to spreadsheets.

Spring 2026: Market Response from Manufacturers

By March, both Merck and Bristol Myers Squibb acknowledged “market access realignments” (corporate for: lower pricing) and projected 10-15% revenue declines in their U.S. oncology portfolios. Manufacturers still kept their patient‑assistance programs running, aware that some Medigap and retiree plans don’t match new Part D caps exactly.

Pharmacists meanwhile noticed their software quietly changing, Keytruda now triggers an “N” icon in many plan interfaces, marking it as a negotiated product. Looks small, but it reroutes claims and rebates entirely through the CMS price channel. Behind that symbol sits CMS’s 2026 AI‑supported adjudication engine, described in Health Affairs (May 2026), built to reconcile these new price rules automatically.

Mid‑2026: Early Outcomes and Remaining Gaps

Half a year in, the data started rolling out. Actuaries saw a 7% drop in net costs for Keytruda and Opdivo relative to 2025. PBMs banked modest savings, and some carriers hinted at lower 2027 premiums because of it. Still, a few gray zones remain: off‑label use, supplemental wrap coverage, and uneven plan authorization schedules hang around like leftovers that nobody wants to claim.

Specialists have started shifting treatment timing now that cost isn’t quite the gatekeeper it once was. Earlier use in therapy lines, more flexibility. But administrative load persists, each plan asks for use re‑confirmation every few months. CMS has yet to standardize that cycle, and yes, clinicians are already tired of the paperwork.

Looking Ahead to 2027

CMS plans another negotiation round in mid‑2026 targeting more oncology biologics, with new prices slated for 2028. How Keytruda and Opdivo play out this year will set the tone. Whether specialty oncology keeps its own tier or merges fully into preferred lists, that’s the test. For now, negotiated pricing isn’t some theoretical policy slide anymore. It’s reshaping real formularies, real coinsurance math, and the way oncologists write orders. That feels new enough.

Medical and Policy Disclaimer

This analysis is for informational purposes only and does not constitute medical, legal, or insurance advice. Patients should talk with their healthcare provider and Medicare plan representative before making treatment or coverage decisions.

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