The Biden-Harris administration announced Thursday that for the first time in history, Medicare can now negotiate drug prices, thanks to the Inflation Reduction Act, which was signed into law in 2022 by President Biden with Vice President Harris casting the tie-breaking vote.
The negotiation program could lead to an estimated $6 billion in savings on prescription drug costs for American taxpayers. People enrolled in Medicare with Medicare Part D prescription drug coverage are expected to save $1.5 billion in out-of-pocket costs beginning in 2026. The Congressional Budget Office estimated that the program will save Medicare $100 billion over the next ten years.
“It’s a relief for the millions of seniors that take these drugs to treat everything from heart failure, blood clots, diabetes, arthritis, Crohn’s disease, and more – and it’s a relief for American taxpayers,” Biden said at Biden’s and Harris’ first joint appearance since Biden announced he would not run for reelection.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
10 drugs to see price cuts of up to 79% off the 2023 list price
Since being first introduced to the market, manufacturers have steadily increased the list prices on the first 10 drugs selected for the Medicare drug price negotiation program. These drugs are among the highest total spending in Medicare Part D.
The new Medicare negotiated drug prices will cut the list prices on these drugs by between 38% and 79%, according to the Department of Health and Human Services (HHS). However, these figures don’t consider or account for the rebates and discounts that drugmakers already provide to Part D plans, information that has not been released publicly.
“I’ve been waiting for this moment for a long long time,” President Joe Biden said Thursday, during his first policy-oriented appearance with Vice President Kamala Harris since leaving the presidential race. “We pay more for prescription drugs, it’s not hyperbole, than any advanced nation in the world.”
Despite pharmaceutical companies' attempts to quash the program in federal court, the price cuts have been approved.
The 10 medications and the discounts off the 2023 list prices are as follows:
- Imbruvica: 38%
- Entresto: 53%
- Eliquis: 56%
- Xarelto: 62%
- Stelara: 66%
- Jardiance: 66%
- Enbrel: 67%
- Farxiga: 68%
- Fiasp/NovoLog: 76%
- Januvia: 79%
Seniors and people with disabilities who are on Medicare and take these drugs will also benefit from the Inflation Reduction Act’s $2,000 cap on out-of-pocket spending, which goes into effect in 2025. The cap will save 19 million beneficiaries an average of $400 per year. That's in addition to the savings from the new negotiated drug prices.
“Two years ago, as vice president, I was proud to cast the tie-breaking vote that gave Medicare the power to negotiate,” Vice President Harris said to cheering crowds. “In the two years since, we’ve been using this new power to lower the price of life-saving medication.” To illustrate, if a Medicare enrollee takes Stelara for arthritis and pays $3,459 for a 30-day supply today, they would pay only $1,174 in 2026.
And this is just the beginning. As part of Medicare’s drug price negotiation program, more drugs will be selected each year. Up to 15 additional prescription medications covered under Part D will be selected for negotiation in 2025, up to an additional 15 Part B and D drugs in 2026, and up to 20 drugs every year after that.
Among the fanfare, Steve Ubl, the president of the lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA) noted, “The administration is using the IRA’s price-setting scheme to drive political headlines, but patients will be disappointed when they find out what it means for them.”
Related Content
-
Small Businesses Are Racing to Use AIThe Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
The Me-First Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
The 'Me-First' Rule of Retirement Spending
Follow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
How to Plan Your First International Trip After RetirementRetirement paves the way for a world of exciting (and intimidating) experiences. An overseas journey can be an ideal way to embrace this new phase of life.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
-
Seven Surprising Reasons Retirees Are Going Back to WorkSure, money is a big reason to come out of retirement, but it's not the only reason retirees are doing it.
