Medicare drug prices are changing: What you should know

Medicare announces its new drug prices for 2026, and many of the most expensive prescriptions are expected to become cheaper for Americans who rely on government health insurance.

President Joe Biden has approved agreements with pharmaceutical companies to reduce the cost of 10 of the most common and expensive Medicare drugs, but the new prices are not expected to be released until Thursday afternoon.

The Biden administration said the new prices would save taxpayers about $6 billion, while seniors with Medicare insurance could save $1.5 billion on their prescriptions.

“For years, millions of Americans were forced to choose between paying for medicine and putting food on the table while Big Pharma blocked Medicare from negotiating prices on behalf of seniors and the disabled. But we fought back – and won,” Biden said in a statement.

“Today, for the first time in history, my administration is announcing that Medicare has reached agreements on new, lower prices with the manufacturers of all 10 drugs selected for the first round of drug price negotiations.”

The drugs affected include those that Americans use to treat diabetes, cancer and heart disease, which affect millions of people each year.

In total, more than 67 million Americans rely on Medicare for health insurance. But high drug prices and premiums have made health care unaffordable for many.

“It's a relief for the millions of seniors who take these drugs to treat heart failure, blood clots, diabetes, arthritis, Crohn's disease and more – and it's a relief for American taxpayers,” Biden said.

Medicare had previously stated that the blood thinners Xarelto and Eliquis as well as the diabetes drugs Jardiance and Januvia would become cheaper as a result of the new agreements.

Until now, the US government was not allowed to negotiate drug prices with the pharmaceutical industry. However, private insurers have always had this option.

“This means that pharmaceutical companies can essentially charge any price they want for life-saving treatments that people depend on, and all Americans pay the price,” White House adviser Neera Tanden said in a conference call with the media on Wednesday evening.

The pharmaceutical companies were not satisfied with Biden's price negotiations and opposed the Inflation Control Act, which put the negotiations into effect.

While prices for the first ten selected drugs will not change until 2026, the U.S. government may select another 15 drugs to negotiate next year.

The Congressional Budget Office estimated that the negotiations would save the government $25 billion over the next seven years.

The Inflation Reduction Act also introduced a cap on drug costs, which will come into effect in 2025. Next year, seniors will have to pay a maximum of $2,000 for their prescription drugs.

“As a result of the Inflation Reduction Act, Medicare Part D has become a stronger safety net for Medicare beneficiaries who require expensive drugs,” said Louise Norris, a health policy analyst for medicareresources.org Newsweek“This will mean a significant financial relief for those insured, who have previously spent far more on their medication.”

With lower prescription drug costs, there is concern that these costs could be passed on to Medicare premium prices. Presumably to mitigate some of these problems, the Centers for Medicare and Medicaid Services pays insurers an additional $15 per member per month.

“Some Republican lawmakers are questioning the premium stabilization program, claiming it would have required congressional approval,” Norris said. “But implementing this program should ensure that people with Medicare Part D will continue to have multiple affordable options in 2025.”

Open enrollment for Medicare begins October 15 and runs through December 7, with all plan selections taking effect in January.

“It's a big win for Medicare beneficiaries. One of the concerns before these negotiations was that no agreement would be reached and some of these drugs would not have the coverage that many need,” said Alex Beene, a financial literacy lecturer at the University of Tennessee at Martin. News week.

“Even if you don't take one of the covered drugs, that's an encouraging sign,” he added. “As the American population ages, more taxpayers will join Medicare in the coming years. The government will be more proactive in negotiating drug price coverage, for which current and future recipients will be grateful.”