A new report from Nicole Rapfogel at the Center for American Progress (CAP) finds that the Inflation Reduction Act’s provision allowing Medicare to negotiate drug prices for its highest cost drugs will reduce drug spending by tens of thousands of dollars a year for millions of people with Medicare and save Medicare millions of dollars a year.
On September 1, 2024, the Centers for Medicare and Medicaid Services (CMS), which oversees Medicare, will announce the prices it has negotiated with pharmaceutical corporations on ten drugs that treat, among other things, diabetes, kidney disease, blood clots and heart failure. Beginning in January 2026, the cost of these drugs should drop considerably.
The ten drugs cost Medicare significantly more than other drugs it covers either because they have very high prices or because they are widely used. A total of nine million people currently use their Part D drug benefit to fill prescriptions for these drugs. These ten drugs represent roughly 20 percent of Medicare’s annual drug spending under Part D.
CAP projects that the price of one insulin product, NovoLog FlexPen will fall $30 a month and the price of one cancer drug, Imbruvica, will fall $6,548 a month. The price of Eliquis, which 3.5 million people with Medicare take, could drop by $123 a month.
Currently, Americans pay many times more than people in other wealthy nations for several of these drugs. For example, a dose of Stelara, another drug whose price Medicare is negotiating, which treats people with autoimmune conditions, costs $2,900 in the United Kingdom and $16,600 in the US. Moreover, Americans paid $6.5 billion in taxpayer dollars for the development of Stelara.
While Medicare is only negotiating the price of 10 drugs this year, by 2030 it will have negotiated the price of 80 drugs. CAP estimates that Medicare will save $25 billion as a result of drug price negotiation in the six years between 2026 and 2031.
Of course, the pharmaceutical corporations are trying to block these price negotiations in the courts, claiming that the government should not be interfering with the prices private corporations set. What they fail to say is that they developed these drugs with $11.7 billion in taxpayer dollars, The Lever reports. And, the pharmaceutical corporations made $70 billion on these drugs in 2022.
Here’s more from Just Care:
- 2024: Medicare Part D coverage and costs
- Case study: Costco saves one couple hundreds of dollars over Medicare Part D
- Some Medicare prescription drug plans dropping insulin coverage
- Drug prices continue to be around three times higher in the US than other wealthy nations
- Millions safely import low-cost drugs from abroad