Medicare starts a long road to cutting prices for drugs, starting with 10 costing it $50.5 billion annually – a health policy analyst explains why negotiations are promising but will take years
The Biden administration released on Aug. 29, 2023, a list of the first 10 drugs that will be up for negotiations with pharmaceutical companies over their Medicare prices.
The drugs are purchased through Medicare Part D, a prescription drug coverage program for Americans ages 65 and older. The 10 medications accounted for more than US$50.5 billion in gross costs between June 1, 2022, and May 31, 2023.
The top 10 list includes such drugs as Johnson & Johnson’s Xarelto, which treats blood clots, and Amgen’s Enbrel, which treats rheumatoid arthritis and psoriasis.
Negotiations are expected to begin in October and continue until August 2024, with lower prices going into effect in 2026.
As a scholar who researches the politics of health policy, I’m skeptical that Medicare drug price negotiations will end up making as big a difference as Democrats have promised, at least in the near future. While U.S. prescription drug prices are excessive, the true potential of the policy is unclear, as it remains muddled in lawsuits and industry opposition. However, if it can withstand the ongoing attacks and become settled law, Americans ages 65 and up could see real financial relief down the line.
Cutting drug costs for Medicare enrollees
The Inflation Reduction Act allows the Centers for Medicare & Medicaid Services to negotiate prices with the companies that make some of the most expensive drugs in the Medicare program, including life-saving cancer and diabetes treatments like Imbruvica and Januvia.
If the negotiations proceed as planned, the drug-price-negotiation provision is expected to save the U.S. government about $98.5 billion by 2031 by allowing it to pay less on prescription drugs for Americans on Medicare – nearly 66 million people. The Biden administration hopes that these cost savings will be passed down to Americans 65 and older through reduced Medicare Part D premiums and lower out-of-pocket costs.
The Inflation Reduction Act provides additional benefits for older Americans, including limiting their out-of-pocket expenses for prescription drugs to no more than $2,000 annually, limiting the growth of Medicare Part D premiums, eliminating out-of-pocket costs for vaccines and providing premium subsidies to low-income people ages 65 and older.
The Biden administration released on Aug. 29, 2023, a list of the first 10 drugs that will be up for negotiations with pharmaceutical companies over their Medicare prices.
The drugs are purchased through Medicare Part D, a prescription drug coverage program for Americans ages 65 and older. The 10 medications accounted for more than US$50.5 billion in gross costs between June 1, 2022, and May 31, 2023.
The top 10 list includes such drugs as Johnson & Johnson’s Xarelto, which treats blood clots, and Amgen’s Enbrel, which treats rheumatoid arthritis and psoriasis.
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