NEW YORK (AP) — Pharmaceutical companies have agreed to slash the Medicare prices for 15 prescription drugs after months of negotiations, reductions that are expected to produce billions in savings for taxpayers and older adults, the Trump administration said.
But the net prices it unveiled for a 30-day supply of each drug are not what Medicare recipients will pay at their pharmacy counters, since those final amounts will depend on each individual’s plan and how much they spend on prescriptions in a given year.
Health Secretary Robert F. Kennedy Jr. touted the deals as part of the administration’s efforts to address affordability concerns among Americans. The Medicare drug negotiation program that made them possible is mandated by law and began under President Joe Biden’s administration.
“President Trump directed us to stop at nothing to lower health care costs for the American people,” Kennedy said in a statement Tuesday evening. “As we work to Make America Healthy Again, we will use every tool at our disposal to deliver affordable health care to seniors.”
The announcement marks the completion of a second round of negotiations under a 2022 law that allows Medicare to haggle over the price it pays on the most popular and expensive prescription drugs used by older Americans, bringing the total number of negotiated drug prices to 25. The new round of negotiated prices will go into effect in 2027. Reduced prices for the inaugural round of 10 drugs negotiated by the Biden administration last year will go into effect in January.
Price negotiations apply to drugs treating diabetes, asthma, cancers and more
The latest negotiated prices apply to some of the prescription medications on which Medicare spends the most money, including the massively popular GLP-1 weight-loss and diabetes drugs Ozempic, Rybelsus and Wegovy. Some of the other drugs involved in the negotiations include Trelegy Ellipta, which treats asthma; Otezla, a psoriatic arthritis drug; and various drugs that treat diabetes, irritable bowel syndrome and different forms of cancer.
Dr. Mehmet Oz, Centers for Medicare and Medicaid Services administrator, said the administration delivered “substantially better outcomes for taxpayers and seniors in the Medicare Part D program” than the previous year’s deals.
Under the first round of Medicare price negotiations, the Biden administration said the program would have saved about $6 billion on net covered prescription drug costs, or about 22%, if it had been in effect the previous year. The Trump administration said its latest round would have saved the government about $8.5 billion in net spending, or 36%, if it had been in effect last year.
It’s unclear exactly how much money the newly announced deals could save Medicare beneficiaries when they are buying prescription drugs at the pharmacy because those costs are determined by various individual factors.
A new rule that kicked off this year also caps out-of-pocket drug costs for Medicare beneficiaries at $2,000, giving some relief to older adults affected by high-cost prescriptions. The administration said estimated out-of-pocket savings for Medicare beneficiaries with drug plans is about $685 million.
Spencer Perlman, director of health care research at Veda Partners, said the Trump administration’s improved outcomes probably resulted from the mix of drugs being negotiated and lessons learned from the first year of negotiations.
Net drug prices are proprietary, he said, but “if we take the administration at their word, I think it demonstrates that they have secured meaningful price concessions for seniors, meaning the Medicare Drug Price Negotiation Program is working as intended.”
Medicare recipients can’t get GLP-1 drugs for obesity, but the administration is making changes
The GLP-1 weight-loss drugs that were part of the negotiations have been especially scrutinized for their high out-of-pocket costs. Yet it’s still unclear to what extent Medicare beneficiaries who want to use the drugs to treat obesity will be able to do so.
Medicare has long been prohibited from paying for weight-loss treatments, but a separate deal recently announced between the Trump administration and two pharmaceutical companies included plans for a pilot program that will expand coverage for the drugs to additional high-risk obese and overweight people.
The Trump administration this year has also negotiated several unrelated deals with drug companies to lower the cost of their products for the wider population.
Pharmaceutical companies, meanwhile, have sued over the Medicare drug negotiations enabled by the 2022 Inflation Reduction Act and remain opposed to them.
“Whether it is the IRA or MFN, government price setting for medicines is the wrong policy for America,” Alex Schriver, senior vice president of public affairs at the Pharmaceutical Research and Manufacturers of America, or PhRMA, said in a statement. “These flawed policies also threaten future medical innovation by siphoning $300 billion from biopharmaceutical research, undermining the American economy and our ability to compete globally.”
Next year, Medicare will negotiate prices for another round of 15 drugs, including physician-administered drugs for the first time.
