Medicare Finally Negotiating Drug Prices Thanks to Inflation Reduction Act
The Center for Medicare and Medicaid has announced its newly negotiated prices for the first ten drugs selected under Medicare’s new Drug Price Negotiation Program, which was created by President Joe Biden’s Inflation Reduction Act. The new prices, which are the result of months of negotiations, will take effect for people with Medicare Part D coverage on January 1, 2026.
According to CMS, the ten drugs chosen — which are used to treat conditions such as heart disease, diabetes, and cancer — are some of the most expensive and frequently dispensed drugs in the Medicare program. About nine million Americans use at least one of the ten selected drugs for negotiation. The agency estimates that if the new prices were in effect last year, Medicare would have saved $6 billion, or approximately 22 percent, across the 10 selected drugs.
Retired tin knocker Sterlin Deane, 70, of Livermore Falls, has been taking the blood thinner Eliquis for three years to prevent blood clots due to his atrial fibrillatio, a type of arrhythmia, or abnormal heartbeat. Under the Medicare Price Negotiation Program, the the price of Eliquis will drop 56 percent from $521 to $231.
“This is long overdue,” said Deane. “If you’re in the construction trades or any other business, who does a no-bid contract? It’s almost unheard of unless there’s a major meltdown and they don’t have a choice. It’s just common sense that the government should negotiate over drug prices.”
The negotiated prices range from 38 to 79 percent discounts off of list prices. Those price reductions are significant given that many of these drugs are in therapeutic classes that already have significant rebates negotiated by pharmacy benefit managers with drugmakers, according to the health care policy nonprofit Kaiser Family Foundation (KFF). People with Medicare prescription drug coverage are expected to see estimated savings of $1.5 billion in their personal out-of-pocket costs in 2026.
As KFF reports, the savings are compounded by other policies to lower drug prices in the Inflation Reduction Act, such as the $2,000 cap on out-of-pocket drug spending that takes effect in 2025, and the $35 cap on insulin costs, drug price inflation rebates and free vaccines. CMS is expected to announce the next fifteen drugs to negotiate under Medicare Part D in February, with the negotiated prices taking effect in 2027.
Presidential candidate Kamala Harris has proposed to strengthen the drug negotiation program by capping the cost of insulin at $35 and out-of-pocket expenses for prescription drugs at $2,000 for everyone, speeding up drug price negotiations and cracking down on pharmaceutical companies who block competition and abusive practices by pharmaceutical middlemen.