On August 15, the Biden administration announced the new prices for ten drugs in Medicare negotiation. The administration predicts that if successful, this price reduction will save at least $6 billion in its first year of implementation.
However, many pharmaceutical giants are not happy with this new development as they predict losses in the future.
The Biden Administration Reveals New Drug Prices
On Thursday, August 15, the Biden administration released new prices for the first ten prescription drugs, making costly medication much less expensive for Americans. These drugs would be available through Medicare, which has been highly controversial since it was first announced.
While it helps Americans save billions of dollars, drug makers are expected to run at a loss in the next few years. This will kick off in 2026 and continue through Medicare for many more years to come.
It Could Save $6 Billion in Medicare Costs
According to government estimates, this new negotiated drug price will save much money in the Medicare program. About $6 billion in net savings, or 22% net savings, will be made in 2026, just after it goes into effect.
In addition, the administration predicts that in 2026 alone, these new drug prices would save Medicare users about $1.5 billion in out-of-pocket costs. Therefore, this makes healthcare for Americans using Medicare much more affordable.
Hope for Longer Lives
Experts have also spoken about how important this is to the future of healthcare in the country and the health of its citizens. Chiquita Brooks-LaSure, the Centers for Medicare & Medicaid Services administrator, said, “For so many people, being able to afford these drugs will mean the difference between debilitating illness and living full lives.”
He also noted that the new prices are not just about costs but will be quite impactful, as they’ll help ensure that you and your loved ones can live longer healthier lives.
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The Negotiated Medicare Drug Prices
The Biden administration also released a fact sheet that showed that the negotiated drug prices are for a 30-day supplier of the ten drugs with the curated list based on prescription fills from 2023.
Therefore, Medicare beneficiaries will now enjoy heavily discounted prices that are quite similar to the price that a wholesaler would pay a pharmaceutical manufacturer for the medications. Medicare has always been cheaper, but now it is set to be very affordable for Americans.
The Discounted Drugs
The first five drugs are Januvia, Fiasp and NovoLog, Farxiga, Enbrel, and Jardiance. Januvia was $527 but will be $113 by 2026. Fiasp and NovoLog were $419 but are now $119 and $2026. Farxiga, Enbrel, and Jardiance were $556, $7,106, and $573, respectively, but they will now be $178.50, $2355, and $197, respectively.
The other five, Stelara, Xarelto, Eliquis, Entresto, and Imbruvica, will now be $4,695, $197, $231, $295, and $9,319, respectively.
The Medicare Drugs Prices
Most of these rebated drug prices cannot easily be compared to the net prices Medicare Part D (Drug coverage) would eventually pay. However, as Leigh Purvis, a prescription drug policy principal at AARP, said, many people are curious about the prices.
“That’s the comparison that people are looking for. Now, recognizing that rebates are confidential, it’s going to be a tough ask.” The net prices that Medicare will pay are strictly confidential and not available to the public.
A Historic Move by the Biden Administration
President Joe Biden issued a statement validating the significance of this huge move. He said these new prices show a “historic milestone” for the country, thanks to the Inflation Reduction Act. He highlighted Vice President Kamala Harris’s tie-breaking vote that helped push the law in the Senate in 2022.
In a separate statement, the Democratic presidential candidate also expressed her satisfaction that the announcement of reducing drug prices would change many lives across the country.
Pharmaceutical Companies Object To Medicare Drugs
Unsurprisingly, many pharmaceutical companies are not happy with this new decision. PhRMA CEO Steve Ubl released a statement saying that there are “no assurances patients will see lower out-of-pocket costs because the law did nothing to rein in abuses by insurance companies and [drug supply chain middlemen] who ultimately decide what medicines are covered and what patients pay at the pharmacy.”
He says it “fundamentally alters” the incentives for drug development and could lead to fewer treatments for severe diseases.
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What Is a Medicare Prescription Drug Plan?
A Medicare prescription drug plan (PDP) is an insurance policy with Medicare that provides people with drugs at reduced prices. The plan helps people afford drugs that they need, which would otherwise be very expensive.
They are part of the Medicare Part D program, which is available to millions of Americans. While the drugs’ prices are heavily subsidized, out-of-pocket charges apply to all Medicare prescription drug plans.
What Drug Does Medicare Spend the Most On?
Reports show that Medicare spends the most money on Eliquis, a blood-thinning drug. In 2021, it was the top-selling drug by the medical insurance company, and its sales were estimated at $12.6 billion that year alone.
This was a 2.5 times increase from 2018, when it was estimated to be a price of $5 billion. Revlimid, a drug that treats cancer, and Xarelto, another blood thinner, come in at second and third positions, respectively, with $5.9 billion and $5.2 billion spent by Medicare.
What Are the Different Types of Medicare?
There are four different types of Medicare. They are divided into Original Medicare (Part A and B), Medicare Advantage (Part C), the drug prescription plan (Part D), and Medigap. To decide which plan fits you best, you must check the Medicare website and see which plan suits you and your current medical needs.
It might take you a while to decide which, but Medicare offers great coverage choices that are quite beneficial.
What Is the Difference Between a Medicare Advantage Plan and a Regular Plan?
Medicare’s original or regular plan and Medicare Advantage plan are quite different. The Medicare Advantage plan covers everything the regular plan covers but has some added benefits.
A Medicare Advantage plan will completely cover things like dental care, fitness benefits, and vision care that the regular ones do not. Therefore, those with many medical needs prefer to opt for the Medicare Advantage provided by the White House.
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