The Biden administration is celebrating a major victory after federal officials finalized deals with drug companies to lower the price of 10 of Medicare’s most popular and costly medications. While the exact new prices for these drugs haven’t been released yet, the administration anticipates significant savings for both taxpayers and older Americans.
The White House estimates that US taxpayers will save $6 billion on the new drug prices, with older Americans potentially saving around $1.5 billion on their prescriptions. These figures are based on preliminary estimates, and the administration has not yet disclosed the detailed methodology used to arrive at these numbers.
Despite the lack of immediate price specifics, the newly negotiated rates will impact the cost of medications used by millions of older Americans to manage various conditions. These drugs include blood thinners like Xarelto and Eliquis, along with diabetes medications such as Jardiance and Januvia. Medicare spent a staggering $50 billion covering these drugs last year alone.
This agreement marks a landmark achievement for the Medicare program, which provides health coverage to over 67 million older and disabled Americans. For decades, the federal government was prohibited from negotiating drug prices with pharmaceutical companies, despite this being a common practice for private insurers. “This meant that drug companies could basically charge whatever they want for life-saving treatments people rely on, and all Americans paid the price,” White House advisor Neera Tanden explained during a press call.
The drug deals will be a key talking point for Vice President Kamala Harris’s presidential campaign, particularly as she cast the deciding vote to pass the legislation that enabled these negotiations. She will join President Joe Biden on Thursday to publicly announce the drug prices, marking their first joint appearance since she assumed the role of the Democratic ticket’s top candidate. Both Biden and Harris are working to persuade voters that costs will decline after a period of high inflation. Their last public appearance together was earlier this month, welcoming back Americans detained in Russia who were released in a prisoner exchange.
Powerful pharmaceutical companies mounted legal challenges to block the negotiations, which were authorized by the Inflation Reduction Act passed by a Democratic-controlled Congress in 2022. This act significantly overhauled Medicare prescription drug regulations. However, executives from these companies have recently hinted during earnings calls that they don’t expect the negotiations to significantly impact their profits.
The Centers for Medicare and Medicaid Services, which oversaw the negotiation process, is expected to release the final drug prices later on Thursday. However, these new prices won’t take effect until 2026. The Department of Health and Human Services will be able to select another 15 drugs for price negotiations next year.
Prior to the finalization of the drug prices, the Congressional Budget Office estimated that these negotiations could save the federal government $25 billion in 2031.
This announcement comes just a day before Harris is set to unveil part of her economic agenda in North Carolina on Friday. She plans to outline additional measures aimed at reducing costs and boosting incomes for middle-class Americans.
