White House Announces Deals to Lower Costs of $50 Billion Medicare Drugs

WASHINGTON — The Biden administration is celebrating a significant achievement following agreements reached between federal officials and pharmaceutical companies aimed at lowering the prices of 10 of Medicare’s most utilized and expensive medications. However, there has been a lack of specific information regarding the actual out-of-pocket costs that senior citizens will face when they purchase these drugs.

Officials from the White House announced their anticipation of approximately $6 billion in savings for U.S. taxpayers due to the new price agreements. Additionally, older Americans are projected to save around $1.5 billion on their prescription medications. Nonetheless, these savings estimates are based on outdated information, and details on how these figures were calculated have not been provided.

Despite the lack of clarity, the new negotiated prices will affect medications that millions of older Americans rely on for managing conditions like diabetes, blood cancers, and prevention of heart failure or blood clots. Included in this list of drugs are popular blood thinners such as Xarelto and Eliquis, as well as diabetes medications like Jardiance and Januvia. Last year, Medicare spent an impressive $50 billion on these medications.

This agreement marks a milestone for the Medicare program, which provides vital health care coverage to over 67 million older and disabled individuals. Traditionally, the federal government was prohibited from negotiating drug prices, even while private insurers routinely engaged in such bargaining.

“Pharmaceutical companies could essentially set any price they desired for essential medications, and American taxpayers bore the consequences,” noted White House advisor Neera Tanden during a call with reporters on Wednesday night.

The newly brokered drug prices are expected to be a key focus for Vice President Kamala Harris’s campaign for the presidency. This is especially important as she cast the decisive vote to pass the law enabling these negotiations. On Thursday, she will join President Biden to announce the drug prices, marking their first joint public appearance since she ascended to the top of the Democratic ticket. Both leaders are working to assure voters that they can expect a reduction in costs following a prolonged period of considerable inflation.

The last joint appearance of the duo was earlier this month when they welcomed home American citizens detained in Russia, released during a significant prisoner swap.

In an attempt to thwart the negotiations, powerful pharmaceutical companies previously attempted to file lawsuits. These negotiations were permitted under the Inflation Reduction Act, passed by a Democratic majority in Congress in 2022, which also introduced broader reforms to Medicare’s prescription drug regulations. However, recent statements from executives of these companies during earnings calls suggest they do not foresee these negotiations having a substantial negative impact on their revenue.

The Centers for Medicare and Medicaid Services, which facilitated the negotiations, is expected to unveil the final drug prices on Thursday. It is important to note that these new prices will not take effect until 2026. Additionally, in the coming year, the Department of Health and Human Services will have the authority to select an additional 15 drugs for negotiation.

The Congressional Budget Office had previously estimated that these negotiations could result in savings of $25 billion for the federal government by the year 2031.

This announcement arrives just a day prior to Vice President Harris unveiling part of her economic strategy at an event in North Carolina, where she will outline further measures intended to reduce costs and enhance the economic prospects of middle-class families.