It is well-documented that Americans have been paying a lot more for prescription drugs than people in any other developed nation, but this week the White House completed “negotiations” with ‘Big Pharma’ that will finally lower those prices for millions of seniors on Medicare.
The Inflation Reduction Act of 2022, which passed in the Senate after a tie-breaking vote by the vice president, will not only save $1.5 billion in out-of-pocket costs for seniors, it will also save the nation’s Medicare system $6 billion—in the first year alone.
Millions of seniors and those with disabilities on Medicare will see their drug costs go down on some of the most common and expensive prescription drugs that treat heart disease, cancer, diabetes, blood clots, and more.
The Department of Health and Human Services reached agreements with the pharmaceutical manufacturers of 10 different drugs which have surged in price since they went on the market. Some of the new prices, like two for diabetes, are being slashed by up to 79 percent, for those with Medicare Part D prescription drug coverage.
The ten drugs are among the prescriptions with highest total spending in Medicare Part D. If the negotiated prices had been in effect during 2023, Medicare would have saved an estimated $6 billion. When the negotiated prices go into effect in 2026, people enrolled in Medicare Part D are estimated to save $1.5 billion in out-of-pocket costs.
For example, a Medicare enrollee who takes Stelara for their arthritis and pays $3,459 for a 30-day supply today would pay only $1,174 in 2026. However, many of these patients on Medicare will also benefit from the new $2,000 cap on out-of-pocket spending (as detailed in the Inflation Reduction Act)—on top of these new savings from negotiated drug prices.
Of the ten drugs, the most commonly prescribed is Eliquis, which is currently treating blood clots for nearly four million Americans on Medicare. The monthly price will plummet by 56%, an overall savings for the nation of many billions of dollars.
As detailed in the legislation, more drugs will be selected each year—up to 15 drugs for negotiation in 2025, and up to 20 drugs every year after that.
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“Americans pay too much for their prescription drugs. That makes today’s announcement historic. For the first time ever, Medicare negotiated directly with drug companies and the American people are better off for it,” said U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra.
“Empowering Medicare to negotiate prices not only strengthens the program for generations to come, but also puts a check on skyrocketing drug prices.”
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