WASHINGTON: The Biden administration has struck new agreements with drug companies to lower the prices of 10 of Medicare’s most expensive and widely used medications. However, specifics on the new drug prices for older Americans remain unclear.
White House officials announced Wednesday night that these new deals are expected to save U.S. taxpayers $6 billion, with seniors potentially saving about $1.5 billion on their medications. These savings projections are based on earlier estimates, and the administration did not provide details on how these figures were calculated.
The renegotiated prices, which are not yet publicly disclosed, will affect drugs used by millions of older Americans for managing diabetes, blood cancers, and preventing heart issues or blood clots. Medications involved include the blood thinners Xarelto and Eliquis, and diabetes drugs Jardiance and Januvia. Medicare spent $50 billion on these drugs last year.
This deal marks a significant milestone for Medicare, which provides coverage for over 67 million older and disabled Americans. Historically, the federal government was prohibited from negotiating drug prices, unlike private insurers.
White House adviser Neera Tanden emphasized that this change addresses a long-standing issue where drug companies could set high prices for essential treatments, affecting all Americans.
The new drug prices will be a key focus of Vice President Kamala Harris’ presidential campaign, as she casts the tie-breaking vote for the law. She will join President Joe Biden on Thursday for a joint announcement of the new prices, marking their first joint public appearance since her elevation to the top of the Democratic ticket. The duo last appeared together to welcome back Americans released from Russia in a recent prisoner swap.
Pharmaceutical companies attempted, but failed, to block the negotiations through lawsuits. Despite this, some companies have suggested that the negotiations will not significantly affect their financial outcomes. The Centers for Medicare and Medicaid Services is expected to release the final prices later Thursday, though they will not take effect until 2026. Next year, the Department of Health and Human Services will select another 15 drugs for price negotiations.
Before finalizing the drug prices, the Congressional Budget Office estimated that the negotiations could save the federal government $25 billion by 2031.
The announcement comes just before Harris is set to reveal part of her economic agenda on Friday in North Carolina, where she will outline additional measures to reduce costs and improve middle-class incomes.
