Article Summary –
1. Legislative Initiative and Purpose
President Biden emphasized that affordable medicines relate to dignity, hope, and fairness, reflecting the objectives of the Biden-Harris administration in implementing the lower-cost prescription drug law, known as the Inflation Reduction Act. This law has made it possible for Medicare to negotiate drug prices directly with pharmaceutical companies, which was previously prohibited.
2. Economic Impact
The first round of Medicare drug price negotiations includes 10 drugs, such as Eliquis and Januvia, which collectively cost taxpayers over $56 billion in 2023. If the negotiated prices had been effective in 2023, Medicare would have saved $6 billion, amounting to a 22 percent reduction in spending on these drugs. For example, the blood thinner Eliquis, used by nearly four million Medicare enrollees, will see its price reduced from $521 to $231, a 56 percent decrease.
3. Future Implementation
The new, lower drug prices will go into effect on January 1, 2026, marking a significant step toward reducing financial burdens on Medicare beneficiaries and ensuring access to essential medications without forcing difficult financial decisions on working families.
President Biden emphasizes that saving money on necessary medicines is about dignity, hope, and fairness. These values reflect the Biden-Harris administration’s efforts to enforce the Inflation Reduction Act. This month, the administration announced reduced prices for 10 drugs chosen for the first Medicare drug price negotiations cycle.
As the regional director at the U.S. Department of Health and Human Services, a part of my role is to inform Virginia residents about the Inflation Reduction Act’s benefits. Many were unaware that Medicare couldn’t negotiate drug prices directly with companies. The new law has eliminated this restriction, allowing for lower prices and securing Medicare’s future.
Last year, CMS identified 10 expensive, life-saving drugs for negotiation, including Eliquis for blood clots and Januvia for type 2 diabetes. Approximately 9 million Medicare users needed one or more of these drugs in 2023, costing taxpayers over $56 billion. Now, we can reduce these costs.
On Aug. 15, President Biden and Vice President Harris revealed the new prices for these 10 drugs, effective Jan. 1, 2026. If these prices had been implemented in 2023, Medicare would have saved $6 billion, or 22% of what was spent on these drugs—savings benefitting taxpayers and working families alike.
For instance, Eliquis, used by nearly 4 million Medicare enrollees, currently costs $521. The new price will be $231, a 56% reduction. This is just the beginning.
Ensuring access to life-saving drugs shouldn’t force families to make harmful choices, like skipping medications to afford food or rent. Our mission is to provide lower prices, hope, and peace of mind for Medicare recipients.
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