The Centers for Medicare and Medicaid Services is moving forward with Medicare drug price negotiations under the Trump administration, although it said it is seeking to bring "greater transparency" to the negotiating table.
In a statement, CMS said lowering drug prices for Americans is a top priority of the Trump administration but that as CMS begins the next round, which includes popular, but expensive weight-loss drugs, Ozempic and Wegovy, it will give "stakeholders" a chance to provide ways to improve the negotiation process.
"As the second cycle begins under the Trump Administration, CMS is committed to incorporating lessons learned to date from the program and to considering opportunities to bring greater transparency in the Negotiation Program," wrote CMS. "CMS intends to provide opportunities for stakeholders to provide specific ideas to improve the Negotiation Program, consistent with the goals of achieving greater value for beneficiaries and taxpayers and continuing to foster innovation." The program has faced criticism from some of the pharmaceutical companies which argue pharmacy benefit managers drive the prices of prescription medicine up.
Sign up for Kiplinger’s Free E-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.
Earlier in January, CMS announced the 15 drugs they are targeting. Ozempic and Wegovy were notable drugs added to the second round of price talks, given that while they have been effective in helping people lose weight, they have faced a lot of backlash because of the high costs associated with them. The list price for Wegovy is $1,349.02 per injection while Ozempic’s list price is $997.58 per injection, which is cost prohibitive for many people who can benefit from these drugs. Insurance, if it's covered, can lower the cost, but it is still too pricey for many.
Medicare’s list includes drugs that cost taxpayers billions
The list includes 15 drugs the White House plans to negotiate, an increase from 10 in the last round. The negotiations between Medicare and the drugmakers tend to take place over several months and the new negotiated prices don’t kick in until 2027. Prior to the White House's statement under President Trump, it was not clear how negotiations would be impacted by Trump and a new Secretary of Health and Human Services.
The drug negotiations are part of the Inflation Reduction Act, put on the books in 2022. The Act allows Medicare, for the first time, to negotiate drug prices directly with the pharmaceutical companies.
When announcing the latest round, CMS said in a press release that between November 2023 and October 2024, roughly 5.3 million people with Medicare Part D coverage used these drugs for several conditions ranging from cancer to type 2 diabetes. The drugs on the list accounted for about $41 billion in total gross covered prescription drug costs under Medicare Part D, or about 14%.
“Last year we proved that negotiating for lower drug prices works. Now we plan to build on that record by negotiating for lower prices for 15 additional important drugs for seniors,” said HHS Secretary Xavier Becerra. “Today’s announcement is pivotal – the Inflation Reduction Act is lowering prices for people on Medicare. HHS will continue negotiating in the best interest of people with Medicare to have access to innovative, life-saving treatments at lower costs.”
The drugs identified for negotiation in the second round include:
- Ozempic; Rybelsus; Wegovy
- Trelegy Ellipta
- Xtandi
- Pomalyst
- Ibrance
- Ofev
- Linzess
- Calquence
- Austedo; Austedo XR
- Breo Ellipta
- Tradjenta
- Xifaxan
- Vraylar
- Janumet; Janumet XR
- Otezla
Ozempic, Wegovy and other GPL-inhibitors are in high demand in the U.S. Due to that demand, Medicare covering them for diabetes and potentially other FDA-approved uses could increase the cost to taxpayers. Lowering the cost of the drugs would also make the medications accessible to more individuals. If negotiations are successful, Medicare will have lowered the prices on 25 drugs that are commonly used in America. CMS said in the coming years it will identify up to 15 more drugs, including drugs covered under Part B and Part D, to negotiate lower costs. It will also identify up to 20 more drugs for each cycle after that as per the plan laid out in the Inflation Reduction Act.
What are GLP-1 drugs?
Ozempic and Wegovy fall in the GLP-1 agonists class. They were originally prescribed to treat diabetes under the generic name semaglutide but have proven to be effective in reducing weight. Ozempic is FDA-approved for the treatment of diabetes and Wegovy is FDA-approved for treating obesity. The drugs mimic a gut hormone that decreases hunger and delays stomach emptying, so people eat less and don’t face severe cravings. They come in an injectable form, which patients administer once a week. Other GLP-1 drugs are available to make it easier, including Rybelsus, which is a daily pill that has the same effects as Ozempic.
Related content
-
USPS Is Raising Prices for Holiday Shipping: Dates and Increases You Need to KnowWhat the USPS's $16 price hike means for your wallet and your small business.
-
July CPI Report Ignites a Risk-On Rally: Stock Market TodayMarket participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
USPS Is Raising Prices for Holiday Shipping: Dates and Increases You Need to Know
What the USPS's $16 price hike means for your wallet and your small business.
-
Don't Be a '98 Pound Weakling' Just Because You're AgingCharles Atlas's tips to the '98-pound weakling' might be the only comic book ads that actually paid off. Swap the X-ray glasses for this healthy habit.
-
For Savers Who Hate Surprises, This Strategy DeliversThis approach gives you peace of mind, regardless of whether rate cuts happen.
-
Are You Supporting Multiple Generations in Retirement?Here’s how to support your parents and your adult children without sacrificing your retirement.
-
Should You Buy a Second Home When You Retire?Buying a second home in retirement, especially with sufficient savings, can enhance your lifestyle or serve as a smart investment. But it requires careful planning.
-
What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's GuideFor Americans in lower- and middle-income tax brackets, the enhanced deduction for older people reduces taxable income, shielding most of their Social Security benefits from being taxed.
-
Financial Planner vs Investment Manager: Who's the Better Value for You?When markets are shaky, who do you trust with your money? A recent study provides useful insights into the value that different financial professionals offer.
-
How to Navigate Your Medicare Advantage Plan in a DisasterIf you're a Medicare Advantage member in an area that has been impacted by a disaster, you might be worried about access to care and medicine. Here's what you need to know.
