US Will Save $6B In First Year, Says Biden Administration As It Announces Negotiated Prices For 10 Prescription Drugs Under Medicare

The Biden administration has disclosed the prices for the first ten prescription drugs that have been negotiated between Medicare and drug manufacturers. This significant step is part of an effort to make expensive medications more affordable for older Americans.

What Happened: The announcement, made on Thursday, indicates a landmark moment in a process aimed at reducing the cost of medication for the elderly, CNBC reported. The government estimates that the newly negotiated prices will result in approximately $6 billion in net savings for the Medicare program in 2026 alone when they officially take effect. Additionally, Medicare enrollees are expected to save $1.5 billion in out-of-pocket costs in 2026.

This development comes just before the second anniversary of President Joe Biden‘s signature Inflation Reduction Act, which empowered Medicare to negotiate drug prices with manufacturers for the first time in the federal program’s nearly 60-year history.

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However, comparing the new negotiated price of a drug with its current list price is challenging, as most of the ten medications are already subject to significant rebates after private negotiations with Medicare Part D plans. The net price that Part D plans to pay for a given drug after these rebates are confidential.

The administration began the price negotiations in August 2023, and the final prices provide drugmakers with an idea of how much revenue they could lose over the next few years. It also sets a precedent for future rounds of Medicare drug price negotiations, which will start in 2025 and beyond.

Why It Matters: This announcement comes amid a political climate where healthcare policies are a major point of contention. Investors in the healthcare sector have been anticipating changes in Medicare regulations under potential future administrations. Under the Biden administration, the Centers for Medicare & Medicaid Services has hardened its stance on the program after facing criticism for insurers overbilling the government and denying care to seniors.

Furthermore, Vice President Kamala Harris, who has been endorsed by President Biden as the Democratic nominee for the 2024 Presidential election, has been seen as a strong advocate for seniors. She has been recognized for her commitment to expanding Social Security and Medicare, and ensuring that all benefits will continue to be paid in full and on time for the foreseeable future.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari