The Inflation Reduction Act of 2022 (IRA) includes a number of provisions aimed at reducing prescription drug costs for the Medicare program, its beneficiaries and taxpayers. Among these changes is an out-of-pocket cap that is in effect for 2024 but will be lowered to $2,000 in 2025.
In addition, for the first time, the IRA has given the Secretary of Health & Human Services (HHS) the authority to negotiate the prices of certain high-cost drugs covered by Medicare. Although the negotiated prices won’t be effective until 2026 (and for certain Part B drugs, 2028), on August 15, 2024 Medicare announced the prices for the first 10 drugs as outlined in a Negotiated Prices Fact Sheet released by the Centers for Medicare & Medicaid Services (CMS). The following list of negotiated prices for the 10 drugs, summarizing the CMS Fact Sheet (and based on a 30-day supply), is from an NBC News article titled “Medicare announces lower prices on 10 common, high-cost drugs” by Berkeley Lovelace, Jr. (Aug. 15, 2024):
- Eliquis, a blood thinner from Bristol Myers Squibb and Pfizer: $231 negotiated price, down from $521 list price.
- Xarelto, a blood thinner from Johnson & Johnson; $197 negotiated price, down from $517 list price.
- Januvia, a diabetes drug from Merck: $113 negotiated price, down from $527 list price.
- Jardiance, a diabetes drug from Boehringer Ingelheim and Eli Lilly: $197 negotiated price, down from $573 list price.
- Enbrel, a rheumatoid arthritis drug from Amgen: $2,355 negotiated price, down from $7,106 list price.
- Imbruvica, a drug for blood cancers from AbbVie and Johnson & Johnson: $9,319 negotiated price, down from $14,934 list price.
- Farxiga, a drug for diabetes, heart failure and chronic kidney disease from AstraZeneca: $178 negotiated price, down from $556 list price.
- Entresto, a heart failure drug from Novartis: $295 negotiated price, down from $628 list price.
- Stelara, a drug for psoriasis and Crohn’s disease from J&J: $4,695 negotiated price, down from $13,836 list price.
- Fiasp and NovoLog, diabetes drugs from Novo Nordisk: $119 negotiated price, down from $495 list price.
According to an HHS press release, the negotiated prices on this first group of 10 drugs range from 38 to 79% discounts off of list prices, with projected savings to the Medicare program of $6 billion in 2026, plus $1.5 billion in out-of-pocket cost savings for beneficiaries in 2026. Also see CMS Plan Language infographic explaining these savings. The drug price negotiation process will continue in future years, with an additional 15 drugs in 2027, another 15 drugs in 2028, and an additional 20 drugs each year thereafter.
August 15, 2024 – D. Lipschutz