How Medicare Negotiations Impact Prescription Drug Costs

Key takeaways

• Prescription drug costs will likely be reduced through Medicare negotiations, according to AARP’s Leigh Purvis.
• Older adults will benefit from lower costs on 10 key drugs that treating common conditions, starting in 2026.
• Lower Medicare spending leads to reduced premiums for all enrollees, improving overall program benefits.

Summary

Medicare negotiations are set to significantly affect prescription drug costs. AARP’s Leigh Purvis explains that the ability to negotiate prices for 10 key drugs can lead to savings for all Medicare enrollees, beginning in 2026 when the new prices take effect. The 10 drugs treat common conditions among older adults, such as cardiovascular issues, cancer and diabetes. As a result, not only will beneficiaries taking these medications see a reduction in their cost sharing; the overall Medicare program will benefit from reduced spending, too, leading to lower premiums. Lower prescription drug costs will have a positive impact on the entire Medicare program. 

The key takeaways and summary were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

Full transcript

 [00:00:00] For a long time, Medicare could not negotiate, nor only had private plans for negotiating on behalf of 

[00:00:10] beneficiaries, and we think that Medicare is going to negotiate much lower prices. The drugs that were selected are drugs that are used to treat conditions that are very common among older adults. So things like cardiovascular 

[00:00:20] issues, things like cancer, things like diabetes. So in terms of impact, of course it's going to help the people who are taking the drugs that are negotiated because those prices are going to come down and so will their cost 

[00:00:30] sharing for them. But it's actually something that affects everyone in the Medicare program because to the extent that the Medicare program is spending less on prescription drugs, that's going to reduce overall 

[00:00:40] spending, which will have an impact on premiums. So this is really something that is going to be beneficial for everyone in the Medicare program regardless of whether they're taking a prescription drug that has been 

[00:00:50] negotiated.