Biden administration to negotiate drug prices to cut Medicare costs
President Joe Biden highlighted ten drugs his administration will target for price negotiations to lower the costs of Medicare for patients.
Ryan Ross,
Medicare will seek to negotiate lower list prices for the blockbuster diabetes and weight loss drugs Ozempic and Wegovy and 14 other medications, a cost-saving move that would take effect in 2027.
The Biden administration announced Friday that Medicare will negotiate discounts with pharmaceutical companies on 15 drugs prescribed to treat cancer, diabetes and asthma. Those drugs are: Ozempic/Wegovy/Rybelsus, Trelegy Ellipta, Xtandi, Pomalyst, Ibrance, Ofev, Linzess, Calquence, Austedo, Breo/Ellipta, Tradjenta, Xifaxan, Vraylar, Janumet and Otezla.
About 5.3 million people with Medicare prescription drug coverage used these medications from November 2023 through October 2024 at a cost of $41 billion to the government-funded health program for adults 65 and older and some disabled Americans.
Novo Nordisk’s blockbuster semaglutide, which is sold under the brand names Ozempic and Rybelsus for diabetes and Wegovy for weight loss, was by far the costliest for Medicare at $14.4 billion, according to Medicare. Wegovy also can be prescribed to reduce the risk of cardiovascular disease in overweight adults.
Medicare drug plans do not cover drugs for obesity but can cover the medication if prescribed for other reasons, such as reducing the risk or heart attack or stroke. The Biden administration has proposed expanding coverage for weight loss drugs. The proposed rule, which requires a lengthy process of collecting public comments and review, would need to be finalized after President-elect Donald Trump takes office.
In a statement, Novo Nordisk said the company “remains opposed to government price setting through the (Inflation Reduction Act) and has significant concerns about how the law is being implemented by this administration.” The company added the law could stifle drug innovation and jeopardize patients’ access to medications.
Medicare won’t seek to negotiate lower prices for Eli Lilly’s popular diabetes drug Mounjaro and weight loss drug Zepbound because they haven’t been on the market long enough to be eligible.
The asthma and chronic obstructive pulmonary disease Trelegy Ellipta accounted for $5.1 billion in spending.
Under President Joe Biden’s 2022 climate and health legislation, the Inflation Reduction Act, Medicare was empowered to negotiate prices with pharmaceutical companies on a limited number of medications. The negotiated discounts apply to multiple versions of the same drug.
The negotiations between Medicare and the pharmaceutical companies will begin later this year, which means the bargaining will take place under the Trump administration. Trump has nominated television celebrity and surgeon Dr. Mehmet Oz to head the Centers for Medicare and Medicaid Services.
The Biden administration last year bargained for lower prices on 10 widely prescribed drugs such as Xarelto or Eliquis, which will take effect in 2026. Another 15 drugs will be selected in 2026 for negotiated prices that will be rolled out in 2028.
Biden said Friday that the drug price negotiations will save money for taxpayers and older Americans on Medicare.
“These 15 drugs, together with the 10 drugs that Medicare already negotiated, represent about a third of Medicare Part D spending on prescription drugs, which means the lower prices my Inflation Reduction Act is delivering will put money back in seniors’ pockets across the country,” he said in a statement.
The drug industry trade group Pharmaceutical Research and Manufacturers of America, or PhRMA, said it plans to work with the Trump administration and Congress to fix what it sees as flaws in Medicare’s drug price negotiations. Drug companies also have filed several lawsuits seeking to halt price negotiations.
PhRMA President and CEO Stephen Ubl said in a statement that the price negotiations are a “pill penalty” because the federal law “lets the government set the price of medicines that often come in pill form much earlier than other types of medicines.”
As a result, Ubl said industry spending on such medications has fallen 70% since the federal law was enacted. He added that the law fails to “rein in abusive practices” from drug-pricing middlemen called pharmacy benefit managers and insurers.
“The IRA price setting process is dangerous for millions of Americans who rely on innovative treatments and created unnecessary, costly bureaucracy,” Ubl said. “In rushing out this list in their final days, the Biden administration once again fails to address the true challenges facing seniors and Medicare.”
Other provisions of the Inflation Reduction Act allow Medicare enrollees to get recommended vaccines with no cost-sharing and limit out-of-pocket costs at $35 for covered insulin products. Beginning Jan. 1, enrollees in Medicare’s Part D drug plans had their out-of-pocket expenses for prescriptions they pick up at the pharmacy or via mail order capped at $2,000 a year.
(This story has been updated to add new information.)
