The Biden-Harris administration announced Thursday that for the first time in history, Medicare can now negotiate drug prices, thanks to the Inflation Reduction Act, which was signed into law in 2022 by President Biden with Vice President Harris casting the tie-breaking vote.
The negotiation program could lead to an estimated $6 billion in savings on prescription drug costs for American taxpayers. People enrolled in Medicare with Medicare Part D prescription drug coverage are expected to save $1.5 billion in out-of-pocket costs beginning in 2026. The Congressional Budget Office estimated that the program will save Medicare $100 billion over the next ten years.
“It’s a relief for the millions of seniors that take these drugs to treat everything from heart failure, blood clots, diabetes, arthritis, Crohn’s disease, and more – and it’s a relief for American taxpayers,” Biden said at Biden’s and Harris’ first joint appearance since Biden announced he would not run for reelection.
10 drugs to see price cuts of up to 79% off the 2023 list price
Since being first introduced to the market, manufacturers have steadily increased the list prices on the first ten drugs selected for the Medicare drug price negotiation program. These drugs are among the highest total spending in Medicare Part D.
The new negotiated prices will cut the list prices on these drugs by between 38% and 79%, according to the Department of Health and Human Services (HHS). However, these figures don’t consider or account for the rebates and discounts that drugmakers already provide to Part D plans, information that has not been released publicly.
“I’ve been waiting for this moment for a long long time,” President Joe Biden said Thursday, during his first policy-oriented appearance with Vice President Kamala Harris since leaving the presidential race. “We pay more for prescription drugs, it’s not hyperbole, than any advanced nation in the world.”
Despite pharmaceutical companies' attempts to quash the program in federal court, the price cuts have been approved.
The 10 medications and the discounts off the 2023 list prices are as follows:
- Imbruvica: 38%
- Entresto: 53%
- Eliquis: 56%
- Xarelto: 62%
- Stelara: 66%
- Jardiance: 66%
- Enbrel: 67%
- Farxiga: 68%
- Fiasp/NovoLog: 76%
- Januvia: 79%
Seniors and people with disabilities who are on Medicare and take these drugs will also benefit from the Inflation Reduction Act’s $2,000 cap on out-of-pocket spending, which goes into effect in 2025. The cap will save 19 million beneficiaries an average of $400 per year. That's in addition to the savings from the new negotiated drug prices.
“Two years ago, as vice president, I was proud to cast the tie-breaking vote that gave Medicare the power to negotiate,” Vice President Harris said to cheering crowds. “In the two years since, we’ve been using this new power to lower the price of life-saving medication.” To illustrate, if a Medicare enrollee takes Stelara for arthritis and pays $3,459 for a 30-day supply today, they would pay only $1,174 in 2026.
And this is just the beginning. As part of Medicare’s drug price negotiation program, more drugs will be selected each year. Up to 15 additional prescription medications covered under Part D will be selected for negotiation in 2025, up to an additional 15 Part B and D drugs in 2026, and up to 20 drugs every year after that.
Among the fanfare, Steve Ubl, the president of the lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA) noted, “The administration is using the IRA’s price-setting scheme to drive political headlines, but patients will be disappointed when they find out what it means for them.”
