Let the games begin. The Inflation Reduction Act of 2022 allows Medicare to do something they have never been able to do before — negotiate with pharmaceutical companies. These price negotiations may help save beneficiaries big and they start now.

The First 10 Medications

It’s not that the federal government has never been allowed to negotiate drug costs. For years, it has been able to do so for Medicaid and for the VA. Now it’s Medicare’s turn.

Medicare price negotiations on the following medications will start in 2023 but will not take effect until January 1, 2026. The actual prices will be announced by September 1, 2024.

MEDICATION	MEDICAL CONDITION	RETAIL PRICE
Eliquis	Blood clots	$519 (every 30 days)
Enbrel	Ankylosing spondylitis Psoriasis Psoriatic arthritis Rheumatoid arthritis	$5,975 – $6,097 (every 4 weeks)
Entresto	Heart failure	$604 (every 30 days)
Farxiga	Diabetes Heart failure Kidney disease	$553 (every 30 days)
Fiasp (includes Novolog)	Diabetes	$558 – $580 (for 500 units, number of units needed per month varies by patient)
Imbruvica	Chronic lymphocytic leukemia Graft versus host disease Small lymphocytic leukemia Waldenstrom macroglobulinemia	$12,591 (every 30 days)
Januvia	Diabetes	$516 (every 30 days)
Jardiance	Diabetes Heart failure	$569 (every 30 days)
Stelara	Crohn’s disease Psoriasis Psoriatic arthritis Ulcerative colitis	$12,078 – $24,147 (every 12 weeks for maintenance therapy, increased costs during induction therapy due to more frequent use)
Xarelto	Blood clots	$512 (every 30 days)

The medical conditions listed here are the official FDA-approved indications for these drugs. Remember that Medicare only covers medications for FDA-approved reasons. If your healthcare provider prescribes it for a different medical condition, it is possible it may not be covered.

Why These 10 Medications

Beneficiaries spent $3.4 billion out of pocket on on these 10 drugs in 2022. Part D spent more than $50.5 billion on these same medications from June 1, 2022 to May 31, 2023. That accounted for 1 in every 5 dollars Medicare spent for prescription medications that year!

More Medications

More drugs will be added to Medicare price negotiations over time.

2026: 10 drugs (Round 1)

2027: Up to 15 additional drugs (Round 2)

2028: Up to 15 additional drugs (Round 3)

2029: Up to 20 additional drugs each year going forward

Insurance Companies Fight Back

The pharmaceutical companies had until October 1, 2023 to agree to negotiate or face penalties. Either they would pay an excise tax starting at 65% (up to a maximum of 95%) of the U.S. sales for that drug, or they would have to opt out of Medicare altogether. Big Pharma does not want to lose out on a market that big.

Instead, multiple drug makers chose to sue the government, claiming that the negotiations are unconstitutional. Thankfully, a federal court in Ohio disagrees and says that the negotiations have to continue. Although the suit was not formally dismissed, it was enough for Big Pharma to agree to the negotiations by the October 1 deadline.

A Lasting Impact

Decreasing Medicare drug costs, by even a fraction of the current spending, could save millions of dollars for patients and for Medicare at large. Funds could be freed up to spend in other areas. More importantly, by making medications more affordable, more people will get the help they need. Lives will be saved.

Explaining the Prescription Drug Provisions in the Inflation Reduction Act. (2023). KFF. https://www.kff.org/medicare/issue-brief/explaining-the-prescription-drug-provisions-in-the-inflation-reduction-act/‌

FACT SHEET: Biden-Harris Administration Announces First Ten Drugs Selected for Medicare Price Negotiation. (2023). The White House. https://www.whitehouse.gov/briefing-room/statements-releases/2023/08/29/fact-sheet-biden-harris-administration-announces-first-ten-drugs-selected-for-medicare-price-negotiation/

HHS Selects the First Drugs for Medicare Drug Price Negotiation. (2023). HHS.gov. https://www.hhs.gov/about/news/2023/08/29/hhs-selects-the-first-drugs-for-medicare-drug-price-negotiation.html

Inflation Reduction Act Research Series- Medicare Part D Enrollee Out-Of-Pocket Spending: Recent Trends and Projected Impacts of the Inflation Reduction Act. (2023). ASPE. https://aspe.hhs.gov/sites/default/files/documents/93a68f3c5ca949dcf331aa0ec24dd046/aspe-part-d-oop.pdf