Medicare Negotiations Could Make These 10 Drugs Cheaper By 2026
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By 2026, Medicare recipients could pay lower prices for 10 of the most expensive and widely-used prescription drugs.
Key Takeaways
The Department of Health and Human Services released a list Tuesday of the drugs that will be subject to price negotiations under a new program designed by President Joe Biden’s administration. The program could save money for the government and patients alike—and is being opposed in court by the pharmaceutical industry.
Drugmakers have until Oct. 1 to decide whether they’ll participate in the negotiations, and any cost savings will go into effect in 2026.
Allowing drug negotiations was one of the most significant provisions of the Inflation Reduction Act, passed in 2022. It allows Medicare, the federal health insurance program for the elderly, to negotiate the cost of drugs for the first time—fulfilling a policy goal of Democratic politicians going back to Bill Clinton’s presidency.
“While the pharmaceutical industry makes record profits, millions of Americans are forced to choose between paying for medications they need to live or paying for food, rent, and other basic necessities,” Biden said in a statement. “Those days are ending.”
Medicare would see most of the savings from price reductions since it pays the bulk of the costs, but beneficiaries would have their out-of-pocket costs reduced. About 9 million Medicare recipients paid $3.9 billion for the 10 drugs on the list, the HHS said in an analysis Tuesday. Patients on the costliest drug—the blood cancer treatment Imbruvica—are paying an average of $5,247 a year.
The 10 drugs, and the amount they cost, according to the White House, are shown in the table below:
Drug NameCommonly treated conditionsCost to Medicare Part D from June 2022 to May 2023Number of Medicare recipients who used the drug from June 2022 to May 2023Cost to Medicare per beneficiaryEliquis Blood clots $16.5 billion 3.7 million $4,448 Jardiance Diabetes; heart failure $7.1 billion 1.6 million $4,487 Xarelto Blood clots; heart and artery disease $6 billion 1.3 million $4,511 Januvia Diabetes $4.1 billion 869,000 $4,703 Farxiga Diabetes; heart failure; chronic kidney disease $3.3 billion 799,000 $4,091 Entresto Heart failure $2.9 billion 587,000 $4,915 Enbrel Rheumatoid arthritis; psoriasis; psoriatic arthritis $2.8 billion 48,000 $58,148 Imbruvica Blood cancers $2.7 billion 20,000 $133,178 Stelara Psoriasis; psoriatic arthritis; Crohn’s disease; ulcerative colitis $2.7 billion 22,000 $119,951 Fiasp; NovoLog Diabetes $2.6 billion 777,000 $3,316
At least six pharmaceutical companies have filed lawsuits to stop the negotiations from going into effect. Merck, the maker of diabetes drug Januvia, argued the negotiation process set up by the Inflation Reduction Act is more like a “gun to the head” than an actual negotiation.
Drugmakers must reach an agreement with the government, pay a tax of up to 95% of sales, or not have their drugs covered by Medicare or Medicaid anymore, effectively removing them from half of the U.S. market.
Manufacturers with drugs on the list including Bristol-Myers Squibb Company (BMY) and Merck (MRK) saw no negative impacts on stock price. Others, like Johnson & Johnson (JNJ) and AstraZeneca (AZN), were down in early trading.