What will these medication price cuts mean for YOU?

Medicare enrollees are expected to save some extra cash on a couple of prescription medications beginning in 2026 after the federal government successfully bargained with pharmaceutical companies to lower list prices for these meds.

The discounts on the list prices vary from 38% to 79%. Approximately nine million Medicare enrollees use at least one of the medicines selected for price negotiation, according to the US Department of Health and Human Services in a news release.

The department estimates that 2026 enrollees will save $1.5 billion in total on out-of-pocket costs, like copays at pharmacies. How much each individual saves personally depends on their Medicare Part D coverage.

HHS expressed that taxpayers spent over $56 billion on 10 medications in 2023. Had the arranged prices been in effect last year, Medicare would have saved around $6 billion.

These prescription medications were selected in the previous year for the first round of price negotiations based on requirements laid out in the Inflation Reduction Act, which was signed into law by Biden in 2022.

At one point, individual Medicare plans could negotiate prescription medication prices, but Medicare was banned from using its influence to negotiate prices for the program.

All Democrats in Congress voted for the IRA, while all Republicans voted against it. So, which medication price cuts are we talking about? Continue reading to find out!

Here are the negotiated prices for the drugs based on a 30-day supply:

-Fiasp and NovoLog, diabetes drugs from Novo Nordisk: $119 negotiated price, down from $495 list price.

-Januvia, a diabetes drug from Merck: $113 negotiated price, down from $527 list price.

-Eliquis, a blood thinner from Bristol Myers Squibb and Pfizer: $231 negotiated price, down from $521 list price.

-Xarelto, a blood thinner from Johnson & Johnson: $197 negotiated price, lower than the $517 list price.

-Imbruvica, a drug for blood cancers from AbbVie and Johnson & -Johnson: $9,319 negotiated price, down from $14,934 list price.

-Jardiance, a diabetes drug from Boehringer Ingelheim and Eli Lilly: $197 negotiated price, lower than the $573 list price.

-Enbrel, an Amgen rheumatoid arthritis drug, has a $2,355 negotiated price, down from the $7,106 list price.

-Stelara, a drug for psoriasis and Crohn’s disease from J&J: $4,695 negotiated price, down from $13,836 list price.

-Farxiga, a drug for heart failure, diabetes, and chronic kidney disease from AstraZeneca: $178 negotiated price, down from $556 list price.

-Entresto, a heart failure drug from Novartis, has a $295 negotiated price, lower than the $628 list price.

The new negotiated prices were compared to the 2023 list prices of the prescriptions

It’s essential to note that these numbers don’t directly compare the new negotiated prices and what Medicare and enrollees would have paid originally, says a health policy professor at Vanderbilt University in Tennessee.

The list price is the full retail cost of prescription medications and doesn’t include any rebates or discounts a pharmaceutical company may have offered. Still, these are pretty significant discounts.

We think it’s a sign that they’re taking these negotiations very seriously and they’re trying to get much lower prices. The end result is a product of months of heated negotiations between pharmaceutical companies and the federal government over the expensive pills.

The prices won’t go into effect until 2026, but the measure is a rather big landmark for Medicare. The federal government has never been able to directly negotiate with drugmakers over the costs of their prescription medications.

So it’s a historic moment, according to White House domestic policy adviser Neera Tanden.

Millions of seniors and other people on Medicare will soon see their drug costs go down on some of the most common and pricey medications that treat cancer, diabetes, heart disease, blood costs, and many others.

Medicare delivers health insurance coverage to over 65 million people in the nation. Administration officials said the new negotiated prices are projected to save Medicare enrollees $1.5 billion in out-of-pocket costs in the first year alone.

As required under the Inflation Reduction Act, negotiations started in January when Medicare presented its opening costs to pharmaceutical companies.

The $1.5 billion is in addition to the savings from other conditions in the Inflation Reduction Act, which include a $35 monthly cap on the out-of-pocket fee of insulin and an annual cap on out-of-pocket prescription medication costs.

Officials said the negotiations are also anticipated to save Medicare $6 billion in the first year. In the end, it took both sides to reach a good deal.

Pharmaceutical companies fight lowered prices

The federal government has until March 2025 to publish a description of how it reached the negotiated costs. If companies refuse to negotiate, they face a tax penalty, which could be lifted if they choose to withdraw their medication from the Medicare program.

All of the pharmaceutical companies subject to negotiations have been asked for comment. A spokesperson for Novartis, for instance, called the talks “unconstitutional.”

It “will have long-lasting and devastating consequences for patients by limiting access to medications now and in the future,” the spokespersons declared.

In a statement, the CEO of Pharmaceutical Research and Manufacturers of America accused the Biden administration of using the negotiations to “drive political headlines.” He further stated that there aren’t any assurances that patients will see lower out-of-pocket costs.

The worry over expensive medications

A study published in JAMA discovered that over half of older adults reported being very concerned about the prices of prescription medications and medical care, now more than ever.

Almost 9 in 10 adults aged 65 or older say they take at least one prescription medication, according to a nonprofit group that analyzes health policy issues.

An investigation from the Commonwealth Fund, a nonprofit healthcare research institute, revealed that retail prices in the US, those pharmacists charge to insurers or patients before rebates or discounts, for the selected medications were 3 to 8 times higher than those in other countries of similar wealth and size.

The 10 chosen prescriptions accounted for over $50 billion of Medicare Part D spending from June 2022 to May 2023, or 20%, according to the CMS.

According to the agency, Medicare recipients paid $3.4 billion out of pocket for those medications in 2022, with the median out-of-pocket spending for the most expensive prescriptions as high as $6,497 per enrollee.

The negotiated pills are only the beginning: In 2027, negotiated prices will take effect for another 15 medications, followed by another 15 in 2028 and 20 more in every following year. It’s likely that seniors could save even more in the next couple of years.

The development could be jeopardized if the pharmaceutical companies succeed in their lawsuits to block the law, which hasn’t been successful so far. It’s a big deal that they reached an agreement with all ten companies, though.

No one left Medicaid and Medicare in protest over their negotiated prices, which is a huge success! The negotiations are limited to medications under Medicare Part D, which covers prescriptions used at home.

However, medications under Medicare Part B that are administered in medical facilities, including chemotherapy medications, will also be subject to negotiation in the next couple of years.

The bottom line

Medicare reported negotiated prices on 10 prescription medications, with the lower list prices set to go into effect at the beginning of 2026. The effect on Medicare enrollees will rely on their Part D plan.

The discounted list prices range anywhere from 38% for the blood cancer medication Imbruvica to 79% for the diabetes prescription Januvia. Approximately 9 million Medicare enrollees use at least one of these.

While price negotiation will most likely decrease patients’ out-of-pocket costs, insurers could raise cost-sharing for these prescriptions or limit access to them through increased administrative burdens. So your pill organizer may still suffer!

How will these medication price cuts affect YOU? Let us know in the comments below. Meanwhile, if you found this article useful, you might also like: Health Insurance Denial: 7 Possible Causes and What You Can Do