Medicare Drug Price Negotiations

Prescription drugs is one of the most costly parts of Medicare’s expenses. More than $135 billion is spent on prescription drugs each year. When a prescription drug benefit was first added to Medicare almost 20 years ago, the law explicitly prohibited the program to negotiate drug prices with pharmaceutical companies. Finally, for the first time, as part of the Inflation Reduction Act, the federal government is allowing Medicare to negotiate the drug prices directly with the manufacturers. The list of the first 10 drugs was released on August 29, 2023. They were chosen by Federal officials from a list of 50 medications that are used most by Medicare beneficiaries and that Medicare spends the most on for Part D.

The Centers for Medicare & Medicaid Services (CMS) and the manufacturers of those chosen drugs are currently negotiating for lower prices to take effect in Jan. 2026. Some drug companies fought against this provision and continue to oppose it. Manufacturers, as well as several business groups, have filed lawsuits in federal courts across the country in an attempt to derail the negotiation process. For now, under the Inflation Reduction Act, if drugmakers refuse to negotiate prices, they risk facing financial penalties or stop participating with Medicare and Medicaid.

Medicare beneficiaries would benefit directly from lower negotiated prices, and the government could use the money saved to help better secure Medicare’s finances. According to a specific schedule, negotiations will include additional drugs in the years ahead, which would enhance the savings. Medicare is scheduled to choose 15 additional drugs for negotiations with prices to take effect in 2027, another 15 in 2028 and 20 more medications annually starting in 2029. Lower Medicare spending is also hoping to lead to potentially lower part D premiums.

The list of the first 10 drugs includes Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and for the following for diabetes: Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill.