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Americans have paid more for their medications than other countries for years, but that’s changing.
In a groundbreaking effort poised to reshape the U.S.health care landscape, the Biden-Harris administration announced Thursday that it has successfully negotiated significant reductions in prescription drug prices through Medicare. The historic initiative, made possible by the Inflation Reduction Act of 2022, offers financial relief to millions of seniors, including those in theLGBTQ+ community, and people with disabilities, who have long struggled with the high cost of their medications.
For many years, Americans have faced some of the highest prescription drug prices globally, leaving seniors and those on fixed incomes with difficult choices between paying for essential medications or other basic needs. Laws that barred Medicare from negotiating prices with drug manufacturers disadvantaged the program in securing better deals.
However, the Inflation Reduction Act of 2022, passed thanks to a decisive tie-breaking vote in the U.S. Senate by Vice PresidentKamala Harris, has changed that. Medicare now has the authority to negotiate directly with pharmaceutical manufacturers, which, according to the administration, is expected to save taxpayers $6 billion and reduce out-of-pocket costs for Medicare enrollees by $1.5 billion in 2026, when the negotiated prices take effect.
PresidentJoe Biden, who is expected to appear at an event with Harris in Maryland on Thursday afternoon, emphasized the importance of this achievement. “For years, millions of Americans were forced to choose between paying for medications or putting food on the table, while Big Pharma blocked Medicare from being able to negotiate prices on behalf of seniors and people with disabilities. But we fought back—and won, “he said in a statement released by the White House.
The administration’s first set of negotiations targeted 10 of the most costly and commonly used drugs under Medicare Part D. The medications treat conditions like heart disease, diabetes, and cancer. The resulting price cuts will bring substantial savings to Medicare beneficiaries, senior administration officials told reporters on a call Wednesday evening.For instance, the cost of Eliquis, a medication for blood clots, will drop by 56 percent, from $521 to $231 for a 30-day supply. Similarly, Jardiance, used for diabetes and heart failure, will see a price reduction from $573 to $197.
Senior administration officials say all Medicare beneficiaries will be subject to the new prices.
White House domestic policy advisor Neera Tanden highlighted the significance of these developments during the press call. “The Biden-Harris administration is delivering on its promise to lower out-of-pocket drug costs for seniors and save money for Americans,” Tanden said. “This day is a long time coming. Advocates,health leaders, and policy leaders have worked for years, even decades, to enact this common-sense reform.”
Health and Human Services Secretary Xavier Becerra emphasized the broader impact, saying, “Americans pay way too much for their prescription drugs. That’s what makes today’s announcement so historic. For the first time ever, Medicare negotiated directly with drug companies, and the American people are better off for it.”
The negotiated prices affect Medicare Part D coverage.
According to the Center for Medicare and Medicaid Services, Medicare Part D covers prescription drugs that beneficiaries take at home, typically medications patients get at a pharmacy, such as pills or insulin. Private insurance companies approved by Medicare offer Part D plans, and they cover a wide range of prescription drugs, including the 10 drugs targeted in the announcement.
Medicare Part B, on the other hand, covers outpatient services, which can include drugs administered by a health care provider, such as chemotherapy or medications given in a doctor’s office. The administration’s future plans involve negotiating prices for Part B drugs, expanding the scope of savings for Medicare beneficiaries.
The effects of these negotiations are expected to ripple across the health care system, setting a new standard for how the government can leverage its purchasing power to secure better deals for the public. Administration officials noted that the projected savings of $6 billion for Medicare and $1.5 billion in reduced out-of-pocket expenses for beneficiaries in 2026 are just the beginning. Starting in 2025, the law will also cap out-of-pocket costs for Medicare beneficiaries at $2,000 annually, providing further financial relief to nearly 19 million people, saving an average of $400 annually, according to the administration.
CMS Administrator Chiquita Brooks-LaSure highlighted the broader implications. “These negotiated prices, they’re not just about costs; they are about helping to make sure that your aunt, your father, your grandfather, or you can live longer and healthier,” she told reporters. “Today is a momentous day, but drug price negotiation is just one of the ways that the Inflation Reduction Act is transforming healthcare as we know it.”
Brooks-LaSure outlined that the Inflation Reduction Act’s benefits are being felt by Medicare beneficiaries who pay nothing for recommended vaccines and caps on insulin costs at $35 per month.
Harris played a pivotal part in the legislative achievement. Her tie-breaking vote in the Senate in August 2022 was crucial in passing the Inflation Reduction Act, which paved the way for the drug price negotiations. Harris highlighted her long track record of advocating for lower drug costs and reflected on her commitment to this cause. “From my time as Attorney General of California and a U.S. Senator, I have consistently worked to lower the costs of prescription drugs and fought to protect patients,” she said in a statement released by the White House.
As the Democratic nominee for the 2024 presidential election, Harris has emphasized that this is just the beginning of the administration’s efforts to combat high drug prices. The administration plans to continue expanding the list of drugs eligible for negotiation, with up to 15 additional Part D drugs set for inclusion in 2025, followed by Part B drugs in 2026.
“President Biden and I will never stop fighting for the health, wellbeing, and financial stability of the American people,” Harris said.
