Ten Prescription Drugs Medicare Will Negotiate First
The names of the first 10 Medicare drugs whose prices the federal government will negotiate directly with manufacturers were released Aug. 29. It marks the first time in history that the price of life-sustaining medications that millions of older Americans in the nation’s largest health program rely upon to prevent strokes and blood clots and to treat diabetes and cancer will be subject to direct negotiation.
Vitamins & Drugs
“This is an important first step toward finally allowing Medicare to use its purchasing power to lower drug prices,” says Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer. “Medicare spends more than $135 billion on prescription drugs every year.”
Between June 2022 and May 2023, Medicare Part D spent $50 billion on the first 10 drugs selected for negotiation. That represents 20 percent of Part D spending during that time period. These medications were used by 8.2 million Medicare beneficiaries.
In the long run, Medicare beneficiaries who often must pay a percentage of a drug’s cost would benefit directly from lower negotiated prices, and the government could use the money saved to shore up Medicare’s finances. Negotiations will be expanded to include additional drugs in the years ahead, which would magnify the savings.
“Letting Medicare negotiate for lower prices is a commonsense solution that will save seniors money and cut government overspending,” LeaMond says.
Here are the 10 drugs that will form the inaugural group of medications subject to negotiations between Medicare and drugmakers. Spending and number of enrollees was between June 2022 and May 2023. These include Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Novolog.
Federal officials drew the list of 10 from among the 50 medications that Medicare Part D spends the most on and that are used most by beneficiaries. All but three of the first 10 drugs are small molecule medicines. Drugmakers that decline to negotiate prices face substantial financial penalties or must stop participating in Medicare and Medicaid, the health coverage program for people with low incomes.
When Congress first added a prescription drug benefit to Medicare nearly two decades ago, the law explicitly forbade the program to negotiate drug prices with pharmaceutical companies. AARP has been one of the most outspoken advocates for changing that policy. “Medicare negotiates a lot of different services that it covers, and prescription drugs were not a part of that until now,” says Leigh Purvis, AARP’s prescription drug policy principal.
Medicare has tens of millions of beneficiaries and brings a lot of bargaining power to the table. Nearly 52 million Medicare beneficiaries are either enrolled in a Part D prescription drug plan or get drug coverage through their Medicare Advantage plan.
While Medicare enrollees will not feel the first effects of negotiated drug prices until 2026, experts point to several other provisions of the new law that are already beginning to save beneficiaries money. Plus, other cost-saving provisions will be rolled out between now and when the negotiated prices kick in.
In 2024, beneficiaries with high drug expenses will get a break from paying any out-of-pocket costs once they reach the so-called catastrophic phase of the Part D prescription drug benefit. Part D premiums will not be allowed to increase more than 6 percent.
The impact of this new policy will go beyond the savings to Medicare beneficiaries who take the 10 drugs on the initial negotiations list. 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.