On August 29, the Biden Administration announced the first 10 prescription medications that will be included in Medicare’s price negotiations with drug manufacturers as the government aims to reduce the financial burden on millions of older Americans and potentially save the Medicare program billions in future prescription costs. The price negotiation program is part of the Administration’s Inflation Reduction Act of 2022. (Prior to the passage of the law, Medicare was barred from negotiating drug prices.) However, this provision of the Act is currently being challenged by the pharmaceutical industry in court.
The drugs were selected by the Centers for Medicare & Medicaid Services (CMS) based on the following criteria: they account for the highest Medicare spending, they have been on the market for years, and they do not face competition from a less expensive generic competitor to drive down their prices.
The new drug prices will be announced on September 1, 2024, and will go into effect on January 1, 2026. In future years, CMS will select up to 15 more drugs for negotiation covered under Medicare Part D for 2027; up to 15 more drugs for 2028, including drugs covered under Part B and Part D; and up to 20 more drugs for each year after that, as outlined in the Inflation Reduction Act.
According to the U.S. Department of Health and Human Services (HHS), the 10 drugs selected accounted for $50.5 billion in total Part D gross covered prescription drug costs, or about 20% of total Part D gross covered prescription drugs costs between June 1, 2022, and May 31, 2023, which is the time period HHS used to determine which drugs were eligible for negotiation.
The 10 Drugs Selected for Price Negotiations
The drugs are ranked according to their total cost to Medicare and include:
Lowering Prescription Drug Costs
“For far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs,” said HHS Secretary Xavier Becerra, in a statement. “But thanks to the landmark Inflation Reduction Act, we are closer to reaching President Biden’s goal of increasing availability and lowering prescription drug costs for all Americans. Although drug companies are attempting to block Medicare from being able to negotiate for better drug prices, we will not be deterred. The Biden-Harris Administration will continue working to ensure that Americans with Medicare have access to innovative, life-saving treatments at lower costs.”