This morning, the Center for Medicare and Medicaid Services (CMS) released the 2026 negotiated prices for 10 Medicare Part D drugs. This is the first time that CMS can negotiate for drug prices as they were empowered by the Inflation Reduction Act (IRA). The IRA has several substantial Medicare Part D changes and as full disclosure, I have a very interesting project and grant proposal that will be looking at one of these, unrelated Part D changes.
The results are substantial:
Estimated Medicare Net Savings in 2023:
Compared to 2023 Medicare spending net of all rebates and certain fees and payments, if the prices agreed to between CMS and participating drug companies under the Negotiation Program had been in effect during 2023, the negotiated prices would have saved an estimated $6 billion in net covered prescription drug costs, which would have represented 22% lower net spending in aggregate.Projected Savings for People with Medicare Part D Coverage:
When the negotiated prices go into effect in 2026, people enrolled in Medicare prescription drug coverage would save under the projected defined standard benefit design an estimated $1.5 billion. These savings from the Negotiation Program are in addition to savings from other cost saving provisions in the Inflation Reduction Act, such as the first ever cap on out-of-pocket drug costs for people with Medicare.
The most important, long term policy implication of today is not the price reduction. Those are real. The important thing is that so far, the CMS authority to leverage massive market power to get big price concessions, even if those concessions are smaller than the headline number due to the net vs gross bubble problem, has survived every court challenge to it. Once the mechanism is validated and operationalized, expanding the mechanism becomes relatively straightforward.
raven
I was recently prescribed Xarelto and its cost is astronomical! I hope this helps.
Mousebumples
I’d have to check the details, but I feel like a number of these are going generic in 2026 or sooner.
I’m also curious how much these prices match the “net cost” prices (eg cost minus rebates) offered in Medicare or other lines of business.
An additional note – Novolog currently has a much lower list price, vs what is listed for 2023 comparison. Lower costs for insulin is good! Though that might be tied to the $35/mo insulin cap, and general shaming on pricing.
RaflW
Seems like $1.5 Bn more money per year staying in the accounts of seniors is a big Biden deal. Dare I say, anti-inflationary even. Saving $4.5 Bn in taxpayer funding is nice, too. Just need to remind voters that this is the sort of thing Republicans want to slam shut asap.
Scout211
Good point. But from the perspective of Medicare patients, the negotiated lower prices are a big relief
nowin 2026.Reposted from downstairs: Link
Baud
@Scout211:
The prices don’t go into effect until 2026.
Scout211
@Baud: TY. Will edit.
Baud
Posting here as well. Today.
raven
@Baud: well fuck
billcoop4
Since I don’t take any of those (and will not start Medicare until next year), I don’t have skin in the game so that doesn’t matter to me. /s
Isn’t that the right reaction? :)
No — this is great news in many ways, especially hearing so-called free-marketers object about using the market to enact policy choices. This route should be done more often.
BC
Anonymous At Work
Holding my breath about whether these reductions can survive a Corner Post type challenge in 2026. Some middle man [gender is sic] will decide that this is costing him money and sue to upend negotiated prices and the current SCOTUS has 6 votes for “private profits > general welfare”. Alito and Thomas would snidely use “freedom of contract” as well.
bluefoot
As I understand it, this is how drugs are cheaper in other countries. They negotiate prices with the pharma companies as an entire country so they have a lot of leverage. In effect, the US has been paying more to make up the difference. What I’m not clear on is the breakdown of the revenue here in the US: how much goes to PBMs and payers, how much goes to the pharma companies themselves, who else gets a slice of the pie.
TBone
My hubby’s Part D provider (private insurance co.) raised his out of pocket cap so he will see no savings whatsoever. Wily bastards.
TBone
This is a good read:
https://angrybearblog.com/2024/08/top-political-issues-in-healthcare#more-154944
Baud
@TBone:
I thought Part D couldn’t legally raise the out of pocket cap.
https://www.medicare.gov/about-us/prescription-drug-law
Steve LaBonne
I definitely look forward to paying less for my Jardiance! It’s been costing me around $300 for a 90 day refill.
Percysowner
I see the Eliquis manufacturer is getting all upset about the pricing.
In other words, we are saving lives so we should be able to force them into poverty just to stay alive. My ex takes Eliquis and another very expensive drug (can’t remember the name) and his donut hole payment is killing him financially, but not taking the drugs will be killing him literally. The cap AND making the donut hole smaller is going to help him so much. But good lord, why is there a donut hole in the first place? Other than to save the insurance companies money.
Baud
@Percysowner:
Donut hole will be gone under IRA.
https://uswlocals.org/united-steelworkers-local-1899-granite-city-il/soar-0/medicare-part-d-coverage-gap-donut-hole-will
Percysowner
@Baud: Good to know. I misremembered that, mostly because I never come near it, so it isn’t something on my personal radar. That will help him so much.
TBone
@Baud: my hubby’s provider started raising the cap when he got his first COLA bump up. His cap was previously miniscule compared to now. They got that started well before 2025 – we’ll see if they change their ways accordingly.
I’m pretty sure they DGAF about legal. Unless I raise a big stink about it. And I have too much else to raise hell about, so that’s not on my radar.
Also, two grand is a lot of money for a senior on a fixed income.
I cover his expenses when he can’t, but we don’t tell anyone. Oops.
stinger
If I didn’t recognize all the drug names in that list, each one with a chipper melody in my ear, I might feel SLIGHTLY more sympathetic toward the drug companies. But they are creating and buying constant air time for commercials to market their drugs. “Ask your doctor about…” If they didn’t spend that money, they could charge less for their drugs.