Negotiated Medicare drug prices effective from Jan. 1
TL/DR –
Lower Medicare costs for 10 popular prescription drugs have been initiated due to negotiations, however, it is unclear how much of these savings will be passed on to Medicare Part D and Advantage plan enrollees. This is a result of the 2022 Inflation Reduction Act that authorized and required Health and Human Services to negotiate the maximum price drug manufacturers can charge Medicare plans for 10 popular drugs per year, starting in 2026. The drugs, primarily used to prevent blood clots and treat diabetes, autoimmune diseases, blood cancers and heart failure, have seen their list prices significantly reduced, with reductions ranging from 38% to 76%.
Reduced Medicare Costs for 10 Popular Drugs Take Effect
Starting from Thursday, lower Medicare costs for 10 widely used prescription drugs have been implemented following successful negotiations. However, how much of these savings will be transferred to enrollees of Medicare Part D and applicable Advantage plans remains uncertain. This stems from the complex and often lacking in transparency nature of drug pricing and reimbursement, despite recent pushes by lawmakers for more transparency.
Details of the Inflation Reduction Act
The Inflation Reduction Act sanctioned and mandated the Department of Health and Human Services in 2022 to negotiate the highest price that drug manufacturers can set for Medicare plans for 10 frequently used drugs every year, starting from 2026. Earlier this year, the Centers for Medicare and Medicaid Services shared the first list of Medicare-negotiated “maximum fair prices” for 10 chosen drugs. The negotiated prices showed a reduction ranging from 38% to 79% off their list prices. It’s worth noting that a drug’s list price, the manufacturer’s sticker price, is rarely the amount paid by insurers or patients, and is mainly used as a baseline for negotiations.
List of Negotiated Drugs
The drugs that have been targeted for price reductions are Eliquis, Enbrel, Entresto, Farxiga, Imbruvica, Januvia, Jardiance, NovoLog/Fiasp, Stelara, and Xarelto. These medicines are used in the prevention of blood clots or the treatment of diabetes, autoimmune diseases, blood cancers, and heart failure.
Significant Price Reductions
The most popular drug among the negotiated ones, Eliquis, which is used as a blood thinner and was taken by approximatedly 4 million Part D enrollees in 2023, had its previous 30-day supply list price of $521 cut down to $231. This represents a 56% reduction from the list price that Bristol Myers Squibb, the manufacturer, can charge to the concerned Medicare plans.
Januvia, a diabetes drug, saw the highest reduction in its list price, plummeting from $527 to $113 for a month’s supply. Similarly, the list prices for Fiasp and Novolog, both insulin drugs produced by Novo Nordisk, a Danish pharmaceutical company, were cut by 76%, bringing them down from $495 to $119 per month. At the other end of the scale, Imbruvica, which is used for specific blood cancers and was taken by 17,000 Part D enrollees in 2023, saw the smallest reduction of 38%, reducing its cost from $14,934 to $9,319 per month.
Impact on Part D and Advantage Enrollees
The benefit of these savings for Part D and Advantage enrollees will largely depend on the specifics of the plan they’re enrolled in, as not all plans provide the same coverage. Private insurers such as Aetna, Blue Cross Blue Shield, and Humana offer different Part D and Advantage plans, each with varying levels of coverage. Advantage plans that come with prescription drug coverage and all Part D plans are legally required to cover the 10 negotiated drugs for the duration they remain in the program.
The Medicare Drug Price Negotiation Program was established to decrease Medicare expenditure on prescription drugs and enhance the program’s sustainability in the long term.
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