The Biden administration is taking a victory lap after federal officials inked deals with drug companies to lower the prices of 10 of Medicare’s most popular and costliest drugs. However, few immediate details were shared about the new prices older Americans will pay when filling those prescriptions.
White House officials announced Wednesday night that they expect U.S. taxpayers to save $6 billion on the new prices, while older Americans could save roughly $1.5 billion on their medications. These projections were based on dated estimates, and the administration shared no details on how they arrived at these figures.
Despite the lack of transparency, the newly negotiated prices—still undisclosed to the public as of early Thursday—will impact drugs used by millions of older Americans to manage conditions like diabetes, blood cancers, and to prevent heart failure or blood clots. These drugs include blood thinners like Xarelto and Eliquis, and diabetes medications like Jardiance and Januvia. Last year, Medicare spent $50 billion covering these drugs.
This deal marks a significant milestone for Medicare, which provides healthcare coverage to more than 67 million older and disabled Americans. For decades, the federal government was barred from negotiating drug prices with pharmaceutical companies, even though this is a routine practice for private insurers.
“This meant that drug companies could basically charge whatever they wanted for life-saving treatments people rely on, and all Americans paid the price,” said White House adviser Neera Tanden during a Wednesday night call with reporters.
These drug deals are set to become a focal point for Vice President Kamala Harris’ presidential campaign, particularly since she cast the tie-breaking vote to pass the law. Harris will join President Joe Biden on Thursday to announce the drug prices, marking their first joint speaking appearance since she replaced him at the top of the Democratic ticket. Both are striving to convince voters that costs will decrease after years of above-normal inflation.
The pair last appeared publicly together to welcome back Americans detained in Russia, who were freed as part of a massive prisoner swap earlier this month.
Pharmaceutical companies attempted to block the negotiations through lawsuits, but failed. The law was enacted in 2022 when a Democratic-controlled Congress passed the Inflation Reduction Act, which overhauled several Medicare prescription drug regulations. Despite their legal challenges, pharmaceutical executives have suggested in recent earnings calls that they don’t expect the negotiations to significantly impact their bottom line.
The Centers for Medicare and Medicaid Services, which led the dealmaking process, is expected to release the final drug prices later on Thursday. However, the new prices won’t take effect until 2026. Next year, the Department of Health and Human Services will have the authority to select another 15 drugs for price negotiations.
Before the drug prices were finalized, the Congressional Budget Office estimated that these negotiations could save the federal government $25 billion by 2031.
The official announcement comes a day before Harris is set to unveil part of her economic agenda on Friday in North Carolina, where she plans to highlight other initiatives aimed at cutting costs and boosting incomes for the middle class.
