For the first time, Medicare will be able to negotiate prices directly with drug companies, lowering prices on some of the costliest prescription drugs.
For the first time, thanks to President Biden’s Inflation Reduction Act – the historic law lowering health care costs – Medicare is able to negotiate the prices of prescription drugs. Today, the U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), announced the first 10 drugs covered under Medicare Part D selected for negotiation. The negotiations with participating drug companies will occur in 2023 and 2024, and any negotiated prices will become effective beginning in 2026. Medicare enrollees taking the 10 drugs covered under Part D selected for negotiation paid a total of $3.4 billion in out-of-pocket costs in 2022 for these drugs.
“For far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs. But thanks to the landmark Inflation Reduction Act, we are closer to reaching President Biden’s goal of increasing availability and lowering prescription drug costs for all Americans,” said HHS Secretary Xavier Becerra. “Although drug companies are attempting to block Medicare from being able to negotiate for better drug prices, we will not be deterred. The Biden-Harris Administration will continue working to ensure that Americans with Medicare have access to innovative, life-saving treatments at lower costs.”
The Biden-Harris Administration has made lowering prescription drug costs and improving access to innovative therapies a key priority. Alongside other provisions in the new law that increase the affordability of health care and prescription drugs, allowing Medicare to negotiate prescription drug prices will strengthen the program’s ability to serve people with Medicare now and for generations to come. The negotiation process will consider the selected drug’s clinical benefit, the extent to which it fulfills an unmet medical need, and its impact on people who rely on Medicare, among other considerations, such as costs associated with research and development as well as production and distribution for selected drugs. As a result of negotiations, people with Medicare will have access to innovative, life-saving treatments at lower costs to Medicare.
The selected drug list for the first round of negotiation is:
- Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill
These selected drugs accounted for $50.5 billion in total Part D gross covered prescription drug costs, or about 20%, of total Part D gross covered prescription drug costs between June 1, 2022 and May 31, 2023, which is the time period used to determine which drugs were eligible for negotiation. CMS will publish any agreed-upon negotiated prices for the selected drugs by September 1, 2024; those prices will come into effect starting January 1, 2026. In future years, CMS will select for negotiation up to 15 more drugs covered under Part D for 2027, up to 15 more drugs for 2028 (including drugs covered under Part B and Part D), and up to 20 more drugs for each year after that, as outlined in the Inflation Reduction Act.
View a fact sheet from the Office of the Assistant Secretary for Planning and Evaluation (ASPE) at: https://aspe.hhs.gov/reports/aspe-ira-drug-negotiation-fact-sheet.
View a CMS fact sheet on the drugs selected for the Medicare Drug Price Negotiation Program at: https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf.
More information on the Medicare Drug Price Negotiation Program is available at https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation.