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The tens of millions of beneficiaries who get their prescription drugs through Medicare will find out on Sept. 1 which 10 medications will become the first ever to have their prices negotiated between the federal government and big drug companies.
Leaders of the Department of Health and Human Services (HHS) and Medicare outlined on Jan. 11 the timetable they will follow to identify the drugs to be negotiated, along with the data the government will use to make its initial price offers and the process HHS and drugmakers will follow between this fall and 2026, when the first negotiated Medicare prescription drug prices will take effect.
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“We know that on average, Americans are paying two to three times more for some of the same drugs that are being sold in other parts of the world for no reason whatsoever,” HHS Secretary Xavier Becerra said Jan. 11 in a call with reporters to outline the negotiation process.
Price negotiations under Medicare are being made possible for the first time under a sweeping budget law passed in the summer of 2022 that includes a number of provisions to help Medicare beneficiaries better afford lifesaving medications. Also under that law: Beginning this year, Medicare enrollees will see the out-of-pocket monthly cost of covered insulins capped at $35 and federally recommended vaccines available for free. What’s more, penalties will be levied on drug companies that raise prices more than the rate of inflation.
“Finally, thanks to this new law, Medicare will begin to use its buying power to get a better deal for American seniors and American taxpayers by negotiating for lower drug prices,” says Bill Sweeney, AARP senior vice president for government affairs. “And this is huge — we know it will save Medicare more than $100 billion — which just goes to show how much Americans have been overpaying for our medicine all these years.”
Under the new law, the first group of 10 drugs that will be subject to negotiation must be among the drugs that Medicare spends the most on. The selected medicines also cannot have any direct competitor, including no generic equivalent. In addition, the drugs must have been on the U.S. Food and Drug Administration’s approved list for many years — seven years for medicines typically taken in pill form and 11 years for biologics, complex medications typically used to treat cancers and other serious illnesses.