Medicare drug price negotiations to save $6 billion in first year

Editor's Note

Medicare’s first negotiations on 10 top-selling prescription drugs for older Americans will save the US government $6 billion in the first year, according to an August 15 article in Reuters.

Enabled by President Joe Biden’s 2022 Inflation Reduction Act, negotiations for drugs used by Medicare—which covers 66 million people—have resulted in price reductions for blood thinners, diabetes drugs, heart failure treatments, anti-inflammatory medicine, and more. According to the article, the price of Merck & Co’s diabetes drug Januvia will drop by 79% when the reductions take effect in 2026, while Novo Nordisk’s insulin aspart products will drop 76%. Others face cuts ranging from 38% to 68%.

The administration claims Medicare patients will save $1.5 billion in out-of-pocket costs, Reuters reports. However, some pharmaceutical companies, like Bristol Myers Squibb and Johnson & Johnson, argue that these price cuts won’t address the root problem of out-of-pocket costs determined by insurers and pharmacy benefit managers.

The administration released its list of the 10 costliest drugs to Medicare that would be subject to negotiations last year, Reuters reports.   Negotiations on 15 other drugs are expected to begin in February. The pharmaceutical industry has fought hard to block the Medicare negotiations.