This Reform is Welcome – but Far from the Transformative Change Needed to Keep the Medicare Trust Fund Solvent
For the last 20 years, all Americans have been getting ripped off by pharmaceutical companies. The heist began when a prescription drug benefit was added for Medicare enrollees (Medicare Part D). Drug company lobbyists made sure Congress wrote the law to prohibit Medicare from negotiating drug prices.
As a result, Medicare is held hostage by drug companies and Medicare pays 300% more for prescription drugs than in Europe or Canada, and close to 10x higher than in developing nations. That means every American who gets a paycheck is paying way more than necessary for prescription drugs. We’re ALL being scammed (not just Medicare beneficiaries) because Medicare is financed with a (regressive) payroll tax.
The Inflation Reduction Act of 2022 finally included modest reform by allowing Medicare to begin negotiating the price of a handful (initially 10) of the thousands of drugs they cover in Medicare Part D.
No doubt you’ve heard politicians and even some stakeholders praise the legislation as historic and transformative when it comes to prescription drug price reform. It’s fair to say the Act is historic because Medicare is finally able to negotiate the price of a handful of drugs (for implementation in 2026).
But the bill IS NOT Transformative. While Medicare is now about to negotiate the prices – they’re limited to negotiating price of just 10 drugs starting this year for implementation in 2026. The next year (2027) they can negotiate the price of 15 more.
By contrast, the drug price reduction passed by the House of Representatives (H.R. 3, the Lower Drug Costs Now Act of 2019) would have allowed Medicare to negotiate the price of between 25-125 brand-name drugs without generic competitors in 2023 with the negotiated price available Medicare, Medicaid & private payers.
See: ‘Inflation Reduction Act of 2022’ Gets a C- for Cutting Prescription Drug Prices
The drug pricing reforms in the Inflation Reduction Act of 2022 are anemic. With a little more backbone, we could have had real price reform. As it is, it’s like bringing home a C- on your report card. Congress still gets credit for the class, but it’s nothing to brag about.
Today the US Department of Health & Human Services announced the first 10 drugs that they will negotiate with the manufacturers – with the new prices finally going into effect in 2026.
Factsheet: Medicare Drug Price Negotiation Program
Below is the list of 10 drugs covered under Medicare Part D selected for negotiation for initial price applicability year 2026, based on total gross covered prescription drug costs under Medicare Part D and other criteria as required by the law. For example, any drug that was approved by the FDA less than 7 years ago can’t be negotiated.
Drug Condition Part D Cost $ # of Part D Users
Eliquis Prevention &treatment of blood clots $16,482,621,000 3,706,000
Jardiance Diabetes; Heart failure $7,057,707,000 1,573,000
Xarelto Prevention / treatment of blood clots $6,031,393,000 1,337,000
Januvia Diabetes $4,087,081,000 869,000
Farxiga Diabetes; Heart failure $3,268,329,000 799,000
Entresto Heart failure $2,884,877,000 587,000
Enbrel Rheumatoid arthritis $2,791,105,000 48,000
Imbruvica Blood cancers $2,663,560,000 20,000
Stelara Psoriasis; Ulcerative colitis $2,638,929,000 22,000
Fiasp et.al. Diabetes $2,576,586,000 777,000
According to the HHS, the list of drugs above represents: “… the 10 drugs with the highest total Part D gross covered prescription drug costs after excluding from the ranked list of 50 negotiation eligible drugs any biologics that qualify for delayed selection as a result of there being a high likelihood that a biosimilar will enter the market within a specified time.”
Over the next 4 years, Medicare will negotiate prices for up to 60 drugs covered under Medicare Part D and Part B, and up to an additional 20 drugs every year after that.
I’m delighted that Medicare can finally actually negotiate the price of at least a few drugs, but quite honestly, I find it hard to be a cheerleader for such a tepid reform when transformative change is needed.
