NEW YORK (AP) — Pharmaceutical companies have reached a consensus to lower Medicare prices on 15 prescription drugs following extensive negotiations, which the Trump administration claims will produce billions in savings for both taxpayers and senior citizens.
However, the net prices announced for a 30-day supply of these medications do not represent the final costs Medicare recipients will pay at the pharmacy, as prices are influenced by individual plans and annual prescription expenditures.
Health Secretary Robert F. Kennedy Jr. highlighted the agreements as part of the administration’s initiatives to address affordability concerns among Americans. The Medicare drug negotiation program that facilitated these cuts is stipulated by law, having commenced during President Joe Biden’s term.
“President Trump instructed us to do everything possible to lower health care costs for the American populace,” Kennedy stated. “In our mission to Make America Healthy Again, we will leverage all available resources to ensure affordable healthcare for seniors.”
The announcement marks the culmination of a second negotiation round under a 2022 statute that permits Medicare to negotiate prices on the most used and costly prescription drugs availed to older Americans, raising the total negotiated drug prices to 25. The newly negotiated prices will take effect in 2027, while reductions from last year's inaugural round will be implemented in January.
Negotiated Prices Target Essential Medications
The latest price agreements pertain to crucial medications that incur significant Medicare expenses, including popular GLP-1 drugs for weight loss and diabetes such as Ozempic, Rybelsus, and Wegovy. Other negotiated medications include Trelegy Ellipta for asthma and Otezla for psoriatic arthritis.
Dr. Mehmet Oz from the Centers for Medicare and Medicaid Services contended that this administration has achieved “substantially better outcomes for taxpayers and Medicare seniors” compared to prior agreements.
The Biden administration estimated that its initial negotiation would have conserved around $6 billion in net covered prescription costs, whereas the Trump administration anticipates its latest agreements could result in approximately $8.5 billion in net savings if implemented last year.
While it remains unclear exactly how much the new agreements will save Medicare beneficiaries at the pharmacy, the administration notes that various individual factors will dictate these costs. A new regulation this year aims to cap out-of-pocket expenses for Medicare beneficiaries at $2,000, potentially relieving the financial burden on seniors grappling with high-cost prescriptions. Expected out-of-pocket savings are projected at around $685 million for Medicare drug plan beneficiaries.
Spencer Perlman, healthcare research director at Veda Partners, attributed the improved outcomes of the Trump administration’s negotiations to the selection of drugs under negotiation and lessons gleaned from the previous year’s process.
Changes in Coverage for Popular GLP-1 Drugs
While the GLP-1 weight-loss drugs featured in the negotiations have faced scrutiny due to their costly out-of-pocket prices, the extent to which Medicare beneficiaries will be able to use these medications for obesity treatment remains ambiguous. Historically, Medicare has been barred from covering weight-loss treatments, yet a recently announced collaboration between the Trump administration and two drug manufacturers aims to initiate a pilot program allowing expanded coverage for high-risk obese and overweight individuals.
The administration has also secured various independent agreements with pharmaceutical companies to further reduce the costs of medicines for the general public.
Meanwhile, the pharmaceutical sector has initiated legal proceedings against the Medicare drug negotiations framed by the 2022 Inflation Reduction Act, expressing opposition to such governmental pricing strategies. Alex Schriver, Senior Vice President of Public Affairs at the Pharmaceutical Research and Manufacturers of America (PhRMA), maintained that government price setting threatens innovation and could detract from $300 billion allocated for biopharmaceutical research, harming the economy and diminishing America’s global competitive edge.
Next year, Medicare will embark on the task of negotiating prices for another set of 15 drugs, marking the first time physician-administered medications will be included in these discussions.
