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Biden Administration Secures Drug Pricing Agreement with Pharmaceutical Companies
The Biden administration announced on Thursday that it has finalized an agreement with major drug manufacturers to lower prices on the 10 most expensive prescription drugs covered by Medicare. This initiative marks a significant milestone as it represents the federal government’s inaugural effort to negotiate drug prices directly.
The negotiations have been framed as a response to the pressing issue of high medication costs that affect many seniors; currently, around 1 in 7 older adults in the United States are reported to struggle with the expense of medications. Details regarding the new prices for the affected drugs are set to be released later today.
This agreement emerges from extensive discussions between federal officials and pharmaceutical companies regarding high-cost medications, including well-known treatments like Eliquis (a blood thinner from Bristol Myers Squibb), Imbruvica (a cancer therapy from AbbVie and Johnson & Johnson), and NovoLog (an insulin product from Novo Nordisk).
While the revised prices are not expected to take effect until 2026, this reform signifies a unprecedented shift for Medicare, which has historically been unable to negotiate drug pricing directly. White House domestic policy adviser Neera Tanden described the development as a “historic moment,” emphasizing that millions of seniors will benefit from lower costs associated with some of the most common and expensive medications for conditions such as heart disease, cancer, and diabetes.
Medicare currently serves more than 65 million individuals in the U.S. According to officials, the agreements reached through these negotiations are projected to save Medicare beneficiaries approximately $1.5 billion in out-of-pocket expenses during the first year. This initiative is part of the Inflation Reduction Act, which set the foundation for these negotiations beginning in January when Medicare initiated discussions with drugmakers.
In addition to the $1.5 billion in savings, other provisions in the Inflation Reduction Act will also contribute to easing the financial burden on patients, such as a cap on insulin costs of $35 monthly and a limit on total out-of-pocket prescription expenses. Health and Human Services Secretary Xavier Becerra described the negotiating process as “intense” and underscored the collaborative efforts involved in securing a favorable outcome.
While drug companies were contacted for comments, leaders from the pharmaceutical sector, including Steve Ubl, the president and CEO of Pharmaceutical Research and Manufacturers of America, criticized the negotiations as a tactic for “political headlines,” casting doubt on whether patients will experience tangible reductions in their out-of-pocket costs.
Public Concern Over Prescription Drug Prices
A recent study published in JAMA indicated that a significant number of older adults are deeply worried about the costs of medical care and prescriptions ahead of upcoming elections, with almost 90% of seniors reporting they take at least one prescription medication. An analysis from the Commonwealth Fund reflects a troubling disparity, showing that U.S. retail prices for the selected drugs are well above those in other similarly wealthy nations, potentially three to eight times higher.
Together, these ten drugs accounted for around $50.5 billion in Medicare Part D spending from mid-2022 to mid-2023, representing a substantial 20% of total expenditure. Last year, Medicare recipients incurred approximately $3.4 billion in out-of-pocket expenses for these drugs, with the most expensive medications costing, on average, $6,497 per beneficiary.
Looking ahead, this agreement will set the stage for future negotiations. Starting in 2027, prices for an additional 15 drugs will be negotiated annually, with the goal of increasing affordability for seniors over time. However, the effectiveness of these negotiations may hinge on the outcomes of a series of ongoing lawsuits from pharmaceutical companies seeking to overturn the law.
Stacie Dusetzina, a health policy professor at Vanderbilt University, commented on the achievement, highlighting the significance of reaching agreements with all participating drug manufacturers without any opting out. The negotiations presently focus on drugs covered under Medicare Part D, which pertains to home medications. In the future, the scope may extend to drugs covered under Medicare Part B, which includes treatments administered in clinical settings.
This article has been adapted from content originally published on NBCNews.com.
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