Medicare policyholders can expect significant price reductions for 10 drugs

The White House and selected drug manufacturers have agreed to reduce the costs of ten commonly prescribed drugs for Medicare beneficiaries.

The U.S. Department of Health and Human Services has negotiated a price reduction of 38 to 79 percent on ten medications for Medicare Part D policyholders, the White House announced on Thursday. Medicare beneficiaries will save $1.5 billion in out-of-pocket costs in 2026 with the new prices, which are part of President Joe Biden's Inflation Reduction Act (IRA) initiatives.

The IRA allowed Medicare, the government health insurance program for older Americans or those with disabilities, to negotiate drug prices with participating drug manufacturers. Last year, the federal government began negotiating prices with participating drug manufacturers under the IRA.

Price reductions were not guaranteed

The negotiations met with resistance from several major pharmaceutical companies such as Johnson & Johnson (JNJ), Bristol-Myers Squibb (BMY) and Merck (MRK), as well as the Pharmaceutical Research and Manufacturers of America (PhRMA), lobbyists for the pharmaceutical industry.

These pharmaceutical companies filed suit claiming the negotiation process was unfair. Merck argued that the process was less like a negotiation and more like a “gun to the head.” So far, all court decisions have been in favor of the federal government, allowing it to continue negotiations.

The 10 drugs with reduced costs include medicines that help treat life-threatening conditions such as diabetes, heart failure and cancer.

Prices for up to 15 additional drugs covered by Medicare Part D will be negotiated in 2025, the White House said.