The Biden Administration announced a negotiated deal with pharmaceutical companies to lower the list prices on ten of the most expensive drugs used widely by Medicare recipients. The negotiations will result in billions of dollars in savings to the Medicare program. How the negotiated prices will affect individuals when filling prescriptions is unclear.
Projected Savings for Medicare Recipients
The White House announced that Medicare recipients will save $1.5 billion in out-of-pocket costs for pharmaceuticals used to treat arthritis, heart disease, diabetes, and more.
Claims of Significant Cost Savings
The Administration claims that the cost savings come from newly negotiated prices with the drug companies. The new price agreement will go into effect in 2026.
Impact on Older Americans Using Critical Medications
For older Americans who rely on Januvia for diabetes and Imbruvica for blood cancer treatment, the new prices will be reduced by 79 percent and 38 percent, respectively. These are the high and low ends of the negotiated discounts. All other drugs will be discounted between these two percentages.
Discounts Based on Original Drug Prices
The percentage discount is based on the drug’s original price before any discounts or rebates are factored in. The final price may not represent that discounted percentage as an out-of-pocket guarantee.
Medicare’s Broader Negotiation Efforts
Medicare negotiated other drugs with drug manufacturers, including Fiasp, NovoLog, Farxiga, Enbrel, Jardiance, Stelara, Xarelto, Eliquis, and Entresto. These drugs treat a variety of disorders commonly affecting an aging population.
President Biden’s Victory for Seniors
President Joe Biden claimed victory for seniors Thursday, recognizing seniors’ economic difficulties in today’s inflationary environment.
In a White House statement, Biden said, “for years…Big Pharma blocked Medicare from being able to negotiate prices on behalf of seniors and people with disabilities…Today, for the first time in history, my Administration is announcing that Medicare has reached agreements on new, lower drug prices with the manufacturers of all ten drugs selected for the first round of drug price negotiation.”
Vice President Harris Highlights Additional Efforts
Vice President Kamala Harris also cited other efforts she and Biden had undertaken during the past three years in office. She claims, “We have cut prescription drug costs, capped the cost of insulin at $35 per month, and lowered premiums for seniors and people with disabilities on Medicare.”
Future Actions and Ongoing Negotiations
Harris also announced further actions they expect to take in the future, which she will carry out if elected President in November.
Harris’s statement said, “Additional prescription drugs will be selected each year as part of our Medicare drug price negotiation program. This includes up to 15 additional drugs covered under Medicare Part K for negotiation in 2025, up to 15 Part B and Part D drugs in 2026, and up to 20 drugs yearly after that.”
Vice President Harris’s Historical Efforts Against Pharmaceutical Companies
Harris also cited her history as Attorney General of California, claiming to have won “record-breaking settlements…that amounted to more than $7 billion against pharmaceutical companies for their unsafe and unfair tactics.”
Historical Context of Medicare’s Relationship with Drug Companies
Historically, drug companies did not negotiate prices with Medicare, and Medicare was a “cash cow” for the drug companies, as Medicare covers some of the sickest Americans due to their elderly age and/or disability status.
The Inflation Reduction Act’s Role in Medicare Price Negotiations
With the passage of the Inflation Reduction Act in 2022, Medicare was able to negotiate drug prices directly with drug companies for the first time.
Details of the Negotiation Process
The U.S. Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS) selected ten drugs under Medicare Part D to negotiate with drug companies.
Timeline for Implementation of New Prices
The negotiations took place in 2023 and 2024, with new prices set to take effect in 2026. Between the ten drugs selected by HHS and CMS for negotiation, current Medicare recipients paid $3.4 billion in out-of-pocket costs for those drugs in 2022.
