Prescription drugs can be expensive. That's especially problematic for retirees living on fixed incomes.
Sure, insurance can partially offset those high costs. However, seniors age 65 and older still pay for more than half of prescription drug costs out of their own pockets, according to the Health Policy Institute.
Help should be on the way, though. The Inflation Reduction Act gives Medicare the power to negotiate prices with drugmakers for the first time ever. Not every drug will be included in these negotiations. But Medicare recipients could see lower prices for 10 drugs in the not-too-distant future.
Image source: Getty Images.
Ten expensive drugs that could cost less
The Inflation Reduction Act will initially allow Medicare to negotiate the prices for 10 high-priced drugs, with the new prices going into effect in 2026. The number of drugs subject to negotiation will increase to 15 in 2027 and 20 in 2029.
Last week, the Biden administration announced that all 10 drugmakers whose products were selected for price negotiation agreed to participate in the negotiations. The 10 included drugs are:
| Drug | Approved Indications | Drugmaker |
|---|---|---|
| Eliquis | Blood clots, stroke | Bristol Myers Squibb |
| Jardiance | Type 2 diabetes, heart failure, chronic kidney disease | Boehringer Ingelheim |
| Xarelto | Blood clots, stroke, cardiovascular disease | Johnson & Johnson |
| Januvia | Type 2 diabetes | Merck |
| Farxiga | Type 2 diabetes, heart failure, chronic kidney disease | AstraZeneca |
| Entresto | Heart failure | Novartis |
| Enbrel | Rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, plaque psoriasis | Amgen |
| Imbruvica | Mantle cell lymphoma, chronic lymphocytic leukemia, Waldenstrom's macroglobulinemia, marginal zone lymphoma, chronic graft vs. host disease | AbbVie |
| Stelara | Psoriasis, psoriatic arthritis, Crohn's disease, plaque psoriasis, ulcerative colitis | Johnson & Johnson |
| Fiasp and NovoLog | Type 1 diabetes, type 2 diabetes | Novo Nordisk |
Data sources: U.S. Department of Health and Human Services, drug websites.
Medicare could especially save money by negotiating the price of Eliquis. In 2021 (the most recent year in which complete data is available), Medicare Part D spent close to $12.6 billion on the blood thinner, making Eliquis its most costly drug of all.
Several of the drugs on the list can be expensive for seniors. For Medicare Part D enrollees who don't receive low-income subsidies, the average annual out-of-pocket costs range from $261 for Fiasp to a whopping $6,497 for Imbruvica.
It's not a done deal
The costs of all 10 of these drugs could be lower for Medicare recipients beginning in 2026. Just how much lower, though, depends on the outcome of Medicare's negotiations. However, there's a possibility that the talks between Medicare and drugmakers won't save seniors as much money as they'd like.
It's also not a foregone conclusion that all of the drugs will have lower prices. Several companies, including AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Johnson & Johnson, and Merck, have filed lawsuits to prevent the Inflation Reduction Act's drug price negotiation provisions from going into effect. The big drugmakers argue that the Medicare negotiations could stifle innovation.
In the meantime, though, all of the companies will move forward with negotiations. They didn't have much of a choice. As a Merck spokesperson told NPR, "[I]t is not tenable for any manufacturer to abandon nearly half of the U.S. prescription drug market."
The final negotiated prices will be announced by Medicare in September 2024. Whether or not Medicare recipients actually see their costs decline for the 10 drugs, however, will ultimately be decided in the federal court system.
