How Stronger Medicare Drug Price Negotiation Could Lower Spending

This AARP Public Policy Institute Spotlight finds that if the prices of 10 top brand name drugs reflected the prices paid in other high-income countries, also known as most-favored nation prices, total projected Medicare spending on the products would fall by nearly $200 billion between 2029 and 2033. These findings highlight a promising way to strengthen Medicare drug price negotiation and expand the Administration’s efforts to give Americans access to most-favored-nation drug prices. Read the full report.

Key Takeaways:

• The US has historically been the only high-income country that does not negotiate prescription drug prices with manufacturers.
• The country recently took an important step forward with the passage of a 2022 law that requires Medicare to negotiate drug prices on behalf of its nearly 70 million beneficiaries. This new program is already creating billions in savings.
• Americans strongly support efforts to strengthen and expand Medicare drug price negotiation.
• This analysis finds that if the prices of 10 top brand name drugs reflected the prices paid in other high-income countries, total projected Medicare spending on the products would fall from $273 billion to $76 billion between 2029 and 2033.
• The findings highlight a key opportunity to expand the Administration’s ongoing efforts to improve prescription drug affordability and give Americans access to most-favored-nation drug prices.