After many months of closely watched negotiations, the Centers for Medicare & Medicaid Services (CMS) announced the list of negotiated prices for 10 drugs. This marks the first set of negotiations between Medicare and drug makers taking place as part of the Inflation Reduction Act, which President Joe Biden signed into law in 2022.
"Americans pay too much for their prescription drugs. That makes today’s announcement historic,” Department of Health and Human Services (HHS) Secretary Xavier Becerra said in a CMS press release.
The 10 drugs Medicare negotiated prices for include blockbusters Jardiance, Stelara and Eliquis. The drugs treat diabetes, heart failure, arthritis and more, and the negotiated prices are as much as 79% lower than their prices in 2023. The negotiated prices apply for people with Medicare Part D prescription drug coverage.
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.
The Biden White House said the negotiated prices will save taxpayers an estimated $6 billion, and people enrolled in Medicare with Part D prescription drug coverage are expected to save $1.5 billion in out-of-pocket costs. The Congressional Budget Office estimates Medicare will save $100 billion over the next 10 years thanks to these negotiations.
The list of Medicare negotiated drug prices
Medicare announced the 10 drugs it chose to negotiate prices for last year. Those drugs were Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and Fiasp/NovoLog.
CMS is following a certain set of parameters to determine which drugs are eligible for negotiations, which includes when the drugs were approved by the FDA and what they treat. After narrowing down a list of drugs eligible for negotiation under the parameters, Medicare further narrowed down the list to these 10 drugs based on which had the highest Medicare Part D expenditures.
These are the negotiated prices, noting that each price is for a 30-day supply:
Eliquis:
- Drug description: Eliquis is a blood thinner used to treat and prevent blood clots. It is commonly prescribed to people who have atrial fibrillation, deep vein thrombosis and pulmonary embolism, and people who have recently had hip or knee replacement surgery and thus are at higher risk of blood clots
- Negotiated price: $231
- Price in 2023: $521
- Price reduction: 56%
Jardiance
- Drug description: Jardiance is commonly prescribed to people with Type 2 diabetes, heart failure and chronic kidney disease. It it used to reduce the risk of cardiovascular death for those patients; reduce the worsening of kidney disease; and lower blood sugar for Type 2 diabetics, along with diet and exercise
- Negotiated price: $197
- Price in 2023: $573
- Price reduction: 66%
Xarelto
- Drug description: Xarelto is also, like Eliquis, used for the prevention and treatment of blood clots, as well as to reduce the risk of serious heart problems, along with low-dose aspirin
- Negotiated price: $197
- Price in 2023: $517
- Price reduction: 62%
Januvia
- Drug description: Januvia is prescribed to people with Type 2 diabetes to help lower blood sugar levels, along with diet and exercise
- Negotiated price: $113
- Price in 2023: $527
- Price reduction: 79% - this is the largest price reduction of these negotiations by percentage
Farxiga
- Drug description: Farxiga, like Jardiance, is prescribed to patients with Type 2 diabetes, heart failure and chronic kidney disease.
- Negotiated price: $178.50
- Price in 2023: $556
- Price reduction: 68%
Entresto
- Drug description: Entresto is prescribed to people with long-lasting or chronic heart failure
- Negotiated price: $295
- Price in 2023: $628
- Price reduction: 53%
Enbrel
- Drug description: Enbrel is prescribed to treat arthritis, psoriasis, and psoriatic arthritis. It is supposed to reduce joint pain and stop permanent joint damage
- Negotiated price: $2,355
- Price in 2023: $7,106
- Price reduction: 67%
Imbruvica
- Drug description: Imbruvica is used to treat blood cancers, including chronic lymphocytic leukemia, Waldenström's macroglobulinemia and chronic graft versus host disease (cGVHD). It is not a chemotherapy drug
- Negotiated price: $9,319
- Price in 2023: $14,934
- Price reduction: 38%
Stelara
- Drug description: Stelara is prescribed to people with Crohn's disease, ulcerative colitis, plaque psoriasis and psoriatic arthritis. It is used via an IV infusion followed by a set of injections over several weeks
- Negotiated price: $4,695
- Price in 2023: $13,836
- Price reduction: 66%
Fiasp/NovoLog
- Drug description: This negotiation includes Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen and NovoLog PenFill. These are insulin injections used to treat diabetes
- Negotiated price: $119
- Price in 2023: $495
- Price reduction: 76%
When do the Medicare drug prices go into effect?
These negotiated drug prices will go into effect for Medicare Part D recipients on Jan. 1, 2026. Approximately 10 million Medicare enrollees used this set of 10 drugs in 2023 (combined), so it's expected the lower prices will have a wide impact.
Along with these drug prices, Part D recipients will soon see other changes in prices. Starting in 2025, they will have a $2,000 cap on out-of-pocket costs, also as part of the Inflation Reduction Act. This is one of the Medicare changes coming in 2025, and the cap could change after 2025.
What's next for Medicare drug price negotiations?
This marks just the first set of Medicare drug price negotiations. Next year, Medicare will select up to 15 more drugs to negotiate for Part D recipients. The following year, 2026, Medicare will select another up to 15 drugs to negotiate, and that will be for drugs covered under Part D or Part B.
The plan is for Medicare to continue to negotiate up to 20 drugs every year after 2026.
"We applaud this monumental milestone in curbing rising drug prices and helping older adults afford their medications while reducing costs for taxpayers," the Medicare Rights Center said about the announcement of the first set of negotiated prices. "The effect of these negotiations will build upon itself year after year as more and more drugs have prices that better reflect their value."
Related Content
-
Interest Rate Cuts and Inflation: What's Really Going On?For more than two years, we've heard a steady drumbeat of news highlighting inflation and its impact on interest rates. The correlation seems clear, but the issue is actually more complex.
-
How to Make a Charitable Plan That Won't Break Your BankGiving back is great … if you have a plan that's as sustainable and smart as it is generous. Here are five tips for giving wisely.
-
Interest Rate Cuts and Inflation: What's Really Going On?
For more than two years, we've heard a steady drumbeat of news highlighting inflation and its impact on interest rates. The correlation seems clear, but the issue is actually more complex.
-
How to Make a Charitable Plan That Won't Break Your Bank
Giving back is great … if you have a plan that's as sustainable and smart as it is generous. Here are five tips for giving wisely.
-
Should You Get a Long-Term or Short-Term CD Before the Next Fed Meeting?Is a long-term or short-term CD better to open before the Fed's next meeting? Here's what you need to know.
-
This Double-Dip Trust Benefit Really Is Too Good to Be TrueLet's clear up the confusion among some trust makers and taxpayers over how grantor trust status affects the step-up in basis and estate tax exclusion.
-
How to Structure Retirement Income to Tamp Down TaxesFrom Social Security to IRAs and investments, with smart tax planning, retirees can have some control over how much of their income they'll get to keep.
-
Four Key Elements of a Good Estate PlanAn estate plan can be complex or simple, depending on your estate and your wishes, but every estate plan should accomplish these basic goals.
-
Four Common Misconceptions About Life InsuranceJust because you have no dependents and no debt doesn't mean life insurance wouldn't come in exceedingly handy for someone in your life or even a charity.
-
Should You Keep Your 401(k) When You Retire?Here are three primary reasons you might want to consider moving your retirement money from your 401(k) to an IRA once you retire.
