On Thursday, President Biden and Vice President-elect of the Democratic Party, Harris, joined forces to deliver a speech for the first time, announcing the first-ever price negotiation between Medicare and pharmaceutical companies, which will result in reducing the prices of the initial 10 prescription drugs by at least 38% to a maximum of 76%.
Federal Medicare spent $50 billion last year on drug expenses. Harris stated in a Thursday statement that the new prices for prescription drugs are expected to save hundreds of thousands of senior citizens and other Medicare beneficiaries $1.5 billion in out-of-pocket costs in the first year; estimated to save taxpayers $6 billion.
The new prices are set to take effect in 2026 for Medicare Part D prescription drug plan enrollees, but government officials have not publicly disclosed the details of how they arrived at these calculation results.
Biden stated in a release, “For years, millions of Americans have been forced to choose between paying for their medications and putting food on the table, while big pharmaceutical companies have prevented Medicare from negotiating drug prices on behalf of seniors and disabled individuals, but we fought back—and won.”
According to a White House situational statement released on Thursday, as part of the Medicare drug price negotiation plan, more prescription drugs will be selected each year for price negotiations, including another 15 drugs for Part D in 2025; up to an additional 15 drugs for Part B and Part D in 2026, and a maximum of 20 drugs each year thereafter.
The statement mentioned that the newly negotiated prices will impact the prices of drugs used by millions of American seniors, for conditions such as diabetes, cancer, heart diseases, and thrombosis.
For example, a Medicare enrollee who takes Stelara for arthritis currently pays $3,459 for a 30-day supply, but by 2026, they will only have to pay $1,174.
Many senior and disabled individuals enrolled in Medicare and taking these drugs will also benefit from the Inflation Reduction Act’s $2,000 cap on out-of-pocket costs, set to take full effect in 2025.
This marks a groundbreaking deal for the Medicare program which provides healthcare to over 67 million elderly and disabled individuals. For decades, the federal government has been prohibited from negotiating drug prices with pharmaceutical companies, a practice common among private insurance companies.
According to the Associated Press, the reduction in drug prices will be a focal point of Harris’s presidential campaign, especially after she, as Senate Majority Leader in 2022, cast the deciding vote to pass the Inflation Reduction Act.
Both Biden and Harris are working to convince voters that costs will start to trend downward after years of above-average inflation.
Pharmaceutical industry officials have criticized the White House’s new measures on drug price reductions, suggesting that healthcare costs will be spread in other ways to taxpayers, including through their Medicare premiums.
Steve Ubl, President of the Pharmaceutical Research and Manufacturers of America (PhRMA), stated on Thursday, “The government is driving political headlines with a price-setting plan using the Inflation Reduction Act, but when patients understand what this means for them, they will be disappointed.”
Ubl argued that the government’s legislation does not curb abuses by insurance companies and pharmacy benefit managers and cannot guarantee patients will see reduced out-of-pocket costs, with over 3 million beneficiaries of government-set drug prices expected to pay more in 2026.
In Ubl’s words, “Ironically, the Inflation Reduction Act is an unfavorable deal imposed on American patients: higher costs, more frustrating insurance denials, and fewer treatment options and cures for our loved ones.”