:max_bytes(150000):strip_icc()/GettyImages-1848357346-d28ccf4f71da4d82ac79196a42bff02e.jpg "Medicare To Begin Price Negotiations Over 10 Commonly Prescribed Drugs")
Key Takeaways
- The government is making initial offers to drugmakers in a new negotiation process over how much Medicare will pay for 10 commonly prescribed drugs.
- Any savings negotiated will take effect in 2026.
- The program, created by the Inflation Reduction Act of 2022, is unpopular with pharmaceutical companies, who are suing to stop it.
- This is the first time that the government has negotiated drug prices instead of paying what the companies charge.
For the first time, Medicare is set to begin negotiations with drugmakers over how much the government and beneficiaries pay for some of the most common prescription medicines.
The government is making initial offers Thursday in negotiations over the price of 10 commonly prescribed drugs, the White House said. The list includes Eliquis, a blood clot medication, and Jardiance, a diabetes medication, which are used by millions, as well as some rarely used but extremely costly drugs. For example, Imbruvica, a blood cancer medication, costs Medicare $133,178 a year for each of the 20,000 people who use it.
All told, Medicare spent $46.5 billion, and people enrolled in the federal health insurance program for seniors paid a total of $3.4 billion for the drugs, according to the Department of Health and Human Services.
“I think that goes without saying Americans pay far too much for prescription drugs,” Xavier Becerra, secretary of the Department of Health and Human Services, said on a conference call with reporters. “There are families throughout America who make real sacrifices to afford their medications.”
Multiple drug companies filed lawsuits in federal court beginning last summer, to stop the process including Merck, (MRK) Bristol Myers-Squibb (BMY) and Johnson & Johnson (JNJ). The companies argue the law is unconstitutional and the negotiating process is coercive.
Companies must either follow the government’s negotiation process, pay an extra tax, or else not have their products eligible for reimbursement from Medicare or Medicaid—effectively cutting them out of the U.S. drug market.
If you take any of the 10 drugs, don’t expect them to immediately get cheaper—any price changes negotiated wouldn’t take effect until January 2026.
The drug negotiations are one of several provisions created by the Inflation Reduction Act of 2022 designed to reduce how much people pay for medications. The act also capped insulin costs at $35 a month for diabetes patients on Medicare and capped annual out-of-pocket drug payments at $3,500 per year starting in 2025, and $2,000 per year starting in 2026 for some beneficiaries.