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Negotiating for Lower Drug Prices Works, Saves Billions

Centers for Medicare & Medicaid ServicesNewsroom




FOR IMMEDIATE RELEASE
August 15, 2024

Contact: CMS Media Relations
CMS Media Inquiries [ https://www.cms.gov/About-CMS/Public-Affairs/PressContacts/Media-inquiries1.html ]

 

*Negotiating for Lower Drug Prices Works, Saves Billions*

"Biden-Harris Administration delivers on promise to lower prescription drug costs for Americans"

In a historic moment that will help lower prescription drug prices for millions of people across America, the Biden-Harris Administration announced that it has reached agreement for new, lower prices for all 10 drugs selected for negotiations. These negotiated drugs are some of the most expensive and most frequently dispensed drugs in the Medicare program and are used to treat conditions such as heart disease, diabetes, and cancer. The new prices will go into effect for people with Medicare Part D prescription drug coverage beginning January 1, 2026. 

If the new prices had been in effect last year, Medicare would have saved an estimated $6 billion, or approximately 22 percent, across the 10 selected drugs. These negotiated prices range from 38 to 79 percent discounts off of list prices. About nine million people with Medicare use at least one of the 10 drugs selected for negotiation. People with Medicare prescription drug coverage are expected to see aggregated estimated savings of $1.5 billion in their personal out-of-pocket costs in 2026. For more detailed information about the negotiated prices please see the Centers for Medicare & Medicaid Services (CMS) Negotiated Prices Fact Sheet [ https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf ].  

“Americans pay too much for their prescription drugs. That makes today’s announcement historic. For the first time ever, Medicare negotiated directly with drug companies and the American people are better off for it,” said U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra. “Congressional budget estimators (Congressional Budget Office) predicted about $100 billion savings over 10 years from drug negotiations, and a $3.7 billion savings in the first year alone. Today we’re announcing that in our first year of negotiations we are saving Medicare an estimated $6 billion and Americans who pay out of pocket will be saving another $1.5 billion moving forward. Empowering Medicare to negotiate prices not only strengthens the program for generations to come, but also puts a check on skyrocketing drug prices.”

“CMS is proud to have negotiated drug prices for people with Medicare for the first time. These negotiations will not only lower the prices of critically important medications for cancer, diabetes, heart failure, and more, but will also save billions of dollars,” said CMS Administrator Chiquita Brooks-LaSure. “Medicare drug price negotiation and the lower prices announced today demonstrate the commitment of CMS and the Biden-Harris Administration to lower health care and prescription drug costs for Americans. We made a promise to the American people, and today, we are thrilled to share that we have fulfilled that promise.”

As a hypothetical example, a senior with Medicare who takes Stelara pays a 25% coinsurance on the drug which may amount to about $3,400 today for a 30-day supply. When the negotiated price goes into effect in 2026, that same 25% coinsurance would cost the beneficiary about $1,100 before the person reaches the catastrophic cap, after which the beneficiary will pay no more out of pocket on their prescription drugs. A beneficiary’s actual costs will depend on their plan’s benefit design.

In August 2023, HHS announced [ https://www.hhs.gov/about/news/2023/08/29/hhs-selects-the-first-drugs-for-medicare-drug-price-negotiation.html ] the first 10 drugs covered under Medicare Part D selected for the first cycle of negotiations.

The selected drugs accounted for $56.2 billion in total Medicare spending, or about 20 percent of total Part D gross spending in 2023. Overall, total Part D gross spending for the 10 selected drugs more than doubled from 2018 to 2022, from about $20 billion to about $46 billion, an increase of 134 percent. Medicare enrollees paid a total of $3.4 billion in out-of-pocket costs in 2022 for these drugs.

“CMS negotiated in good faith on behalf of the millions of people who rely on these 10 drugs for their health and well-being. The new negotiated prices will bring much needed financial relief, affordability, and access,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare. “Throughout the process, we remained true to our commitment to be thoughtful and transparent, meeting publicly with patients, providers, health plans, pharmacies, drug companies and others to help inform the process. We will continue to do so for future cycles. Our team is actively working on the next cycle of negotiations where we will combine what we have learned from this first cycle and apply it in negotiating prices for the next round of up to 15 selected drugs.”

The Office of the Assistant Secretary for Planning and Evaluation (ASPE) also released new data today detailing historic pricing trends of the 10 drugs selected for the first cycle of the negotiation program. The report finds that from 2018 to 2023, list prices increased as much as 55 percent.

CMS will select up to 15 more drugs covered under Part D for negotiation for 2027 by February 1, 2025. CMS will select up to 15 more drugs covered by Part B or Part D for 2028, and up to 20 more Part B or Part D drugs for each year after that, as required by the Inflation Reduction Act.

In addition to these newly negotiated prices, people with Medicare are already experiencing lower drug costs thanks to the Inflation Reduction Act. And, next year, all Medicare Part D enrollees will benefit from a $2,000 out-of-pocket cap on their prescription drug costs, further making prescription drugs more affordable for seniors and people with disabilities.

View the CMS Negotiated Prices Fact Sheet at https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf [ https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.cms.gov%2Ffiles%2Fdocument%2Ffact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf&data=05%7C02%7CErin.Hemlin%40hhs.gov%7Cf956bf26ca8b49273d2308dcbc9a21ee%7Cd58addea50534a808499ba4d944910df%7C0%7C0%7C638592617393134644%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=M1syGi8%2Bh7X2uJS0fFL44Ytv3Impc6sx0otV5H2P7rU%3D&reserved=0 ]

View the Historic Trends Fact Sheet from the Office of the Assistant Secretary for Planning and Evaluation (ASPE) at https://aspe.hhs.gov/reports/medicare-drug-price-negotiation-program-comparing-drug-price [ https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Faspe.hhs.gov%2Freports%2Fmedicare-drug-price-negotiation-program-comparing-drug-price&data=05%7C02%7CErin.Hemlin%40hhs.gov%7Cf956bf26ca8b49273d2308dcbc9a21ee%7Cd58addea50534a808499ba4d944910df%7C0%7C0%7C638592617393146830%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=sdJOGhoYJBivjbdehr2fzaJfjMkLwQhTDnQkT7wCb78%3D&reserved=0 ]

View a CMS Plain Language infographic at https://www.cms.gov/files/document/infographic-negotiated-prices-maximum-fair-prices.pdf [ https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.cms.gov%2Ffiles%2Fdocument%2Finfographic-negotiated-prices-maximum-fair-prices.pdf&data=05%7C02%7CErin.Hemlin%40hhs.gov%7Cf956bf26ca8b49273d2308dcbc9a21ee%7Cd58addea50534a808499ba4d944910df%7C0%7C0%7C638592617393141061%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=V4mxIzBq4Cft50FL4HmZFmU3%2BPjl7OF%2B8LDb0wCe%2F6I%3D&reserved=0 ]

For more information about the Inflation Reduction Act, including plain language materials, please visit LowerDrugCosts.gov [ lowerdrugcosts.gov ].  For more information available in Spanish, please visit MedicamentosBajoPrecio.gov [ medicamentosbajoprecio.gov ].

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