Exploring the Pros and Cons of Medicare Negotiating Drug Prices
- Jasmine Uchi, PharmD
- Aug 31, 2023
- 4 min read
Updated: Jun 12
UPDATE: On January 17, 2025 the U.S. Department of Health and Human Services (HHS) announced that 15 additional drugs will be subject to price negotiations under Medicare Part D. These negotiations will take place in 2025, with the new prices effective in 2027, as detailed in the updated table below.
Through the Inflation Reduction Act, which was signed into law on August 16, 2022, Medicare can improve access to affordable medications by now being able to negotiate prices directly with drug manufacturers as the federal health insurance for people 65 or older. Over the next 4 years, Medicare will discuss prices for about 60 drugs that are covered under Medicare Part D and Part B and continue discussing the prices of about 20 additional drugs each following year. This is a historic step forward towards the reduction of prescription drugs costs and providing many more patients access to important treatment options.
The Difference Between Medicare Parts
First Set of Drugs Selected for Medicare Price Negotiation
The Health and Human Services Department (HHS) has picked the first ten drugs for Medicare drug price negotiations. Millions of Medicare Part D enrollees rely on these 10 vital treatment options to manage life-threatening chronic conditions, but their high costs place a major financial burden on patients who need them. In 2022, people who took these drugs paid $3.4 billion out-of-pocket, while Medicare paid $50 billion.
“Far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs.” - HHS Secretary Xavier Becerra
Drug Name | Manufacturer | Indication |
2 | 0 | 2 |
Eliquis (apixaban) | Bristol-Myers Squibb | Prevention and treatment of blood clots |
Jardiance (empagliflozin) | Boehringer Ingelheim and Eli Lilly | Diabetes; Heart failure |
Xarelto (rivaroxaban) | Janssen | Prevention and treatment of blood clots; Reduction of risk for patients with coronary or peripheral artery disease |
Januvia (sitagliptan) | Merck | Diabetes |
Farxiga (dapagliflozin) | AstraZeneca | Diabetes; Heart failure; Chronic kidney disease |
Entresto (sacubitril and valsartan) | Novartis | Heart failure |
Enbrel (etanercept) | Amgen | Rheumatoid arthritis, psoriasis, psoriatic arthritis |
Imbruvica (ibrutinib) | Pharmacyclics and Janssen | Blood cancers |
Stelara (ustekinumab) | Janssen | Psoriasis, psoriatic arthritis; Crohn's disease; Ulcerative colitis |
Fiasp; Fiasp FlexTouch; FiaspFill (insulin aspart) | Novo Nordisk | Diabetes |
NovoLog, NovoLog FlexPen, NovoLog PenFill (insulin aspart) | Novo Nordisk | Diabetes |
2 | 0 | 2 |
Ozempic; Rybelsus; Wegovy (semaglutide) | Novo Nordisk | Ozempic; Rybelsus: Diabetes Wegovy: Weight loss management |
Trelegy Ellipta (fluticasone furoate, umeclidinium bromide and vilanterol trifenatate) | GlaxoSmithKline | Chronic Obstructive Pulmonary Disease; Asthma |
Xtandi (enzalutamide) | Astellas Pharma | Prostate cancer |
Pomalyst (pomalidomide) | Celgene/Bristol-Myers Squibb | Multiple myeloma |
Ibrance (palbociclib) | Pfizer | HR+ (hormone receptor-positive), HER2- (human epidermal growth factor receptor 2-negative) advanced or metastatic breast cancer |
Ofev (nintedanib) | Boehringer Ingelheim | Pulmonary fibrosis |
Linzess (linaclotide) | Allergan/Abbvie | Irritable bowel syndrome/Constipation |
Calquence (acalabrutinib) | AstraZeneca | Blood cancers |
Austedo; Austedo XR (deutetrabenazine) | Teva Neuroscience | Chorea associated with Huntington’s disease; Tardive dyskinesia |
Breo Ellipta (fluticasone furoate and vilanterol) | GlaxoSmithKline | Chronic Obstructive Pulmonary Disease; Asthma |
Tradjenta (linagliptan) | Boehringer Ingelheim | Diabetes |
Vraylar (cariprazine) | Allergan/Abbvie | Schizophrenia |
Xifaxan (rifaximin) | Salix/Bausch and Lomb | Irritable bowel syndrome/ Travelers’ diarrhea |
Janumet; Janumet XR (sitagliptin and metformin hydrochloride) | Merck | Diabetes |
Otezla (apremilast) | Amgen | Psoriatic Arthritis |
Implications of Negotiation
Medicare drug price negotiation could lower costs for seniors and taxpayers, but there are some potential downsides.
The first round of negotiations will begin in 2023, but negotiated prices will only go into effect in 2026.
Drug companies may be less likely to invest in research and development with potential for reduced profits from drugs created, move overseas, delay drug releases, or focus on developing treatments for profitable diseases rather than prevalent ones.
Private insurers may have to pay more to make up the difference, which could lead to higher premiums and out-of-pocket costs for patients (e.g. alpha-gal patients who need to have an animal-free version of a medication which may not be part of the drug negotiation list).
Conclusion
The negotiation of drug prices is a complex issue, but it is one that is essential to addressing the high cost of prescription drugs in the United States. Medicare has the potential to be a powerful force in bringing down drug prices, but it is important to highlight that it brings both positive and negative possibilities. While it can certainly alleviate financial burdens for seniors and taxpayers, potential drawbacks like reduced innovation, increased costs for private insurance, and limited drug accessibility underscore the complexity of this issue. Some of these drawbacks may especially affect vulnerable groups such as alpha-gal patients, with whom we work closely here at Pill Clarity. As we move forward, it's essential to recognize these potential implications and conduct further research to gain a comprehensive understanding of the true impact that drug price negotiations might have on healthcare and the pharmaceutical industry. Only then can we ensure that everyone has access to the affordable, quality care they deserve.
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