Medicare drug price negotiations
Because of the high cost of some prescription drugs for Medicare beneficiaries, the CMS has announced the first 10 drugs that will be subject for Medicare drug price negotiations. The negotiations are part of the Inflation Reduction Act. Up until recently, Medicare has been able to negotiate prices for medical care beneficiaries receive but this did not include the costs of medications. This is about to change when the negotiated prices go into effect as of 2026.
Medicare will negotiate with drugmakers over the cost for the some of the most expensive medications and does not apply to drugs that have a generic alternative. The first 10 medications chosen for negotiations are:
- Eliquis (a blood thinner)
- Enbrel (for rheumatoid arthritis)
- Entresto (for heart failure)
- Farxiga (for diabetes, heart failure & chronic kidney disease)
- Fiasp & Novalog (for diabetes)
- Imbruvica (for blood cancers)
- Januvia (for diabetes)
- Jardiance (for diabetes)
- Stelara (for psoriasis & Chron’s disease)
- Xarelto (a blood thinner)
According to the CMS, the 10 drugs above accounted for 20% of the Medicare Part D spending ($50.5 billion) during the period from June 2022 through the end of May 2023. Part D of Medicare covers prescriptions taken by beneficiaries at home. It does not cover medications administered by medical providers in medical facilities for treatment of things like cancer or other health conditions. In these situations, Medicare Part B covers the necessary drugs.
Medicare beneficiaries spend billions of dollars for prescription drugs
Because of the high cost of some essential medications, beneficiaries sometimes have to either limit basic needs or go without the drugs that help maintain their quality of life. All the while, drug manufacturers rake in record setting profits.
These 10 drugs are just the beginning
This list of 10 drugs is just the starting point. In 2027 Medicare hopes to add 15 more drugs and even more in the years that follow. This list will grow each year as long as the drug manufacturers are unsuccessful in their attempts to stop the drug cost negotiations.
What will drug manufacturers do
If the drug companies do not agree to the negotiations, they face possible tax penalties. Drug manufacturers can avoid the tax penalty if they remove their drug from the Medicare market. However, if they do that, they will take lifesaving drugs from Medicare beneficiaries as well as lose a large part of their market share.
Some large drug companies are seeking legal counsel to stop the drug price negotiations. They argue that the loss in income will affect their ability to fund necessary research and development and that in turn will reduce their ability to produce new medical treatments.