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If Congress includes a provision to allow Medicare to negotiate the price of some prescription drugs in the major budget bill it's working on, Part D premiums could decline 15 percent by the end of the decade, according to a new analysis.
A report by the nonpartisan Henry J. Kaiser Family Foundation (KFF) shows that, according to Medicare's actuaries, if the U.S. Department of Health and Human Services were given the authority to negotiate directly with pharmaceutical companies, consumers would save a total of $14 billion in Part D premiums by 2029. This savings "translates into estimated per capita savings for Part D enrollees who pay premiums of $39 annually in 2023, increasing to $85 in 2029," the report says.
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The proposals being debated in the House of Representatives and the Senate as part of a sweeping $3.5 trillion budget bill would allow price negotiations for some high-priced brand-name drugs, both under Part D prescription drug plans and for medications administered under Part B in doctors' offices.
"The biggest benefit of negotiation is that it would lower costs in particular for medications with no competition," says Tricia Neuman, senior vice president at KFF and coauthor of the report. When it comes to the pricing for these noncompetitive drugs, she adds, "the government's hands are tied, meaning the government has no ability or leverage to negotiate to bring down prices. And that puts a burden on patients and adds significant costs to the federal government."
Neuman says that while the KFF report specifically looks at the effects negotiations would have on premiums, if the government could successfully negotiate prices, that would bring down other out-of-pocket costs for all consumers in addition to producing savings for the Medicare program. The Biden administration has endorsed proposals that would apply the lower prescription drug prices resulting from negotiations to all those who buy such medications. The nonpartisan Congressional Budget Office has estimated that allowing Medicare to negotiate prices would save government health plans more than $450 billion over 10 years.