Medicare reaches agreement to reduce drug costs by $50 billion a year
Majority Leader in the US Senate Chuck Schumer announced that Medicare has negotiated new, lower and fairer prices for 10 of the most expensive drugs in Medicare. A provision in the Inflation Reduction Act now enables the federal government to negotiate drug prices directly with pharmaceutical companies.
Medicare spent $50 billion on drug costs last year, and taxpayers are expected to save $6 billion under the new prices, which will not take effect until 2026. Older people could save up to $1.5 billion in total out-of-pocket costs on their drugs.
The renegotiated prices will affect the prices of drugs taken by millions of older Americans to treat diabetes and blood cancers and to prevent heart failure or blood clots. The drugs include the blood thinners Xarelto and Eliquis and the diabetes drugs Jardiance and Januvia.
This year, Medicare selected the 10 highest-cost drugs for negotiations Medicare Part D that do not have generics of their drugs but are eligible for such competition. Next year, Medicare will select another 15 Part D drugs to negotiate. In 2027, it will negotiate another 15 drugs while expanding negotiations to Medicare Part B, which covers drugs administered in a doctor’s office. In 2028 and each year thereafter, Medicare will negotiate a new set of 20 drugs. 50 million Americans are enrolled in Medicare’s Part D prescription drug program, over 3 million of them in New York.
Schumer said these new negotiated Medicare drug prices would go hand in hand with other key drug affordability provisions he enshrined in his Inflation Reduction Act, including a cap on total drug costs, which will be reduced to $2,000 per year starting in January, free vaccinations for seniors and a $35 cap on insulin costs for Medicare beneficiaries, to make health care more affordable for the more than 3.8 million New York seniors who receive Medicare.
