WASHINGTON, D.C. — The Biden Administration has announced new, reduced costs for the first ten drugs subject to Medicare price negotiations. This development marks a significant victory in the ongoing effort to make prescription medications more affordable for millions of Americans. The ten drugs included in this initial negotiation are Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and NovoLog/Fiasp.
U.S. Senator Bob Casey (D-PA), Chairman of the U.S. Senate Special Committee on Aging, has been a vocal advocate for this initiative. In his statement, Casey emphasized the burdensome cost of prescription drugs for many Americans. “For far too long, prescription drug costs have hung like a bag of rocks tied around the necks of millions of Americans, weighing them down every single day,” said Casey. He highlighted the relief that this move brings, particularly to older Americans who rely on these medications.
The price negotiations are a result of the Inflation Reduction Act of 2022, signed into law by President Biden. This legislation aims to improve Medicare by expanding benefits, lowering drug costs, and enhancing the program’s sustainability. For the first time, Medicare can directly negotiate prices for high-expenditure, single-source drugs without generic or biosimilar competition. The Centers for Medicare & Medicaid Services (CMS) selected the ten drugs for the first cycle of negotiations, with the new prices set to take effect on January 1, 2026.
The negotiation process was thorough and collaborative. CMS engaged in good faith with drug companies, considering factors such as research and development costs, therapeutic alternatives, and production expenses. The process involved multiple meetings and exchanges of offers and counteroffers, leading to mutually agreed-upon prices for each drug.
In 2023, approximately 8.8 million Medicare Part D beneficiaries used these ten drugs, which accounted for $56.2 billion in total prescription drug costs under Part D. If the negotiated prices had been in effect in 2023, Medicare would have saved an estimated $6 billion, a 22% reduction in net covered prescription drug costs. Once the negotiated prices are implemented, Medicare beneficiaries are projected to save around $1.5 billion in out-of-pocket costs.
The CMS has committed to transparency throughout this process, ensuring that the negotiated prices reflect both the need for affordability and the importance of continued innovation in drug development. The negotiated prices will be updated annually based on the Consumer Price Index for all urban consumers (CPI-U) and will remain in effect as long as the drugs are part of the Medicare Drug Price Negotiation Program.
This announcement is a critical step towards reducing the financial burden of prescription drugs for Medicare beneficiaries. The efforts spearheaded by Senator Casey and supported by the Biden Administration aim to make healthcare more accessible and affordable for all Americans.
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