“New era of affordability”: Historic Medicare negotiations lower drug prices

After six months of negotiations made possible by the Inflation Reduction Act, the Biden administration announced Thursday that Medicare officials had reached agreements with pharmaceutical companies to lower the prices of 10 widely used drugs, promising an estimated $1.5 billion in out-of-pocket savings for millions of Americans whose prescriptions are covered by Medicare.

The negotiations have “ushered in a new era of affordability for patients across the country,” said Merith Basey, executive director of Patients for Affordable Drugs. When the new prices take effect on Jan. 1, 2026, patients will be able to save hundreds and even thousands of dollars a month on medications.

The U.S. Department of Health and Human Services said if the new prices had gone into effect last year and the drugs had been 38 to 79 percent cheaper than their list price, Medicare could have saved an estimated six billion dollars on the 10 drugs taken by nine million people in the United States.

“The Medicare negotiations are changing the trajectory of drug pricing in the United States, breaking the monopoly power of big pharmaceutical companies that dictate brand-name drug prices to the people of this country,” Basey said. “They mark a critical shift in the system to make it work for the people it is designed to serve – the patients – rather than those who profit from it. The lower negotiated prices symbolize new hope for patients who take these drugs and have been forced to make impossible choices between their health, well-being and financial stability.”

The following medicines are among those affected by the first round of price negotiations:

• Januvia is used by 843,000 Medicare Part D beneficiaries to treat diabetes and its price was negotiated down by 79%, from $527 for a 30-day supply to $113;
• Jardiance, used by 1.8 million people to treat diabetes, heart failure and kidney disease, has seen its price reduced by 66% from $573 to $197;
• Eliquis, used by 3.9 million people to prevent and treat blood clots, with its price reduced by 56% from $521 to $231; and
• Stelara is used by 23,000 people to treat conditions such as psoriasis and Crohn's disease. The price was slashed by 66% from $13,836 to $4,695.

Chiquita Brooks-LaSure, director of the Centers for Medicare and Medicaid Services (CMS), said the agency was “proud to have negotiated drug prices for Medicare beneficiaries for the first time.”

“These negotiations will not only lower prices for vital drugs for cancer, diabetes, heart failure and others, but will also save billions of dollars,” Brooks-LaSure said. “The Medicare drug price negotiations and the lower prices announced today demonstrate the commitment of CMS and the Biden-Harris administration to lower health care and prescription drug costs for Americans. We made a promise to the American people, and today we are pleased to announce that we have delivered on that promise.”

“The lower negotiated prices symbolize new hope for patients taking these medications who have been forced to make impossible choices between their health, well-being and financial stability.”

Peter Maybarduk, director of drug access at the consumer advocacy group Public Citizen, stressed that the pharmaceutical industry and its Republican allies had made great efforts to block progress in negotiations and called the results of the talks a “great success.”

“Despite vicious and stubborn opposition from the pharmaceutical industry, Medicare has finally negotiated drug prices and promised American taxpayers long-overdue savings,” Maybarduk said.

The U.S. Chamber of Commerce and the pharmaceutical companies Merck and AstraZeneca have filed lawsuits to stop the negotiations. Representatives of the Chamber of Commerce claim that lower drug prices would impair companies' ability to innovate and research new treatments and drugs.

“This claim lacks substance because corporations' spending on self-enriching activities, including stock buybacks, dividends to shareholders, and executive compensation, far exceeds their investment in innovation,” Public Citizen said.

In March, a federal district judge in Delaware dismissed AstraZeneca's lawsuit that the drug negotiation program was unconstitutional. Courts in Ohio and Texas dismissed other lawsuits, but the industry is expected to continue to pursue legal action.

Despite objections from major pharmaceutical companies, the drug price negotiation program is popular with voters, with 92 percent of Democrats, 75 percent of Republicans and 81 percent of independent voters expressing support.

Basey said the reduced drug prices were proof “that change is possible when patients demand it” – despite unanimous opposition from Republican lawmakers to the Inflation Reduction Act (IRA), which included the negotiating program.

“This is a significant victory, but it's just the beginning,” Basey said. “As we celebrate this milestone, we remain committed to expanding the Medicare bargaining program to cover more drugs and fighting for additional reforms to lower drug prices for all patients who need help.”

By next February, CMS is expected to select up to 15 more drugs covered under Medicare Part D for which to reduce their price starting in 2027. It plans to select 15 more drugs for 2028 and up to 20 more for each subsequent year, as required by the IRA.

While Republicans, including presidential candidate Donald Trump, “want the pharmaceutical industry to control seniors so they can pay higher prices, Democrats have pushed for lower costs, more consumer protections and accountability for drug companies that raise their prices with impunity,” said Senator Ron Wyden (D-Oregon), chairman of the Senate Finance Committee. “These new, lower prescription drug prices under Medicare mean seniors will save money at the pharmacy counter, and they mark the first step toward a fundamental change in the relationship between the pharmaceutical industry, taxpayers and seniors who need affordable prescription drugs.”