'New Era of Affordability': Historic Medicare Negotiations Slash Drug Prices

After six months of negotiations made possible by the Inflation Reduction Act, the Biden administration on Thursday announced that Medicare officials had reached agreements with drug companies to lower the prices of 10 widely used drugs promising estimated savings of $1.5 billion in out-of-pocket costs for millions of Americans with Medicare prescriptions coverage.

The negotiations have "ushered in a new era of affordability for patients across the country," said Merith Basey, executive director of Patients for Affordable Drugs, with patients due to save hundreds and even thousands of dollars per month on medications when the new prices go into effect on January 1, 2026.

The U.S. Health and Human Services Department said that if the new prices had been in effect last year, with drugs costing 38% to 79% less than their list prices, Medicare would have saved an estimated $6 billion on the 10 drugs, which are used by 9 million people in the United States.

"Medicare negotiation alters the trajectory of drug pricing in the U.S. and begins to break the monopoly power of big drug corporations to dictate prices of brand-name drugs to people in this country," said Basey. "It marks a critical shift in the system to make it work for the people it is supposed to serve—patients—rather than those who profit from it. The lower negotiated prices symbolize new hope for patients on these drugs who have been forced to make impossible choices between their health, well-being, and financial stability."

The medications affected by the first round of price negotiations include:

• Januvia, which is used by 843,000 Medicare Part D recipients for diabetes and whose price was negotiated down 79% from $527 for a 30-day supply to $113;
• Jardiance, used by 1.8 million people for diabetes, heart failure, and kidney disease and whose price was lowered 66% from $573 to $197;
• Eliquis, used by 3.9 million people to prevent and treat blood clots, with the price reduced 56% from $521 to $231; and
• Stelara, used by 23,000 people for diseases including psoriasis and Crohn's disease, with the price negotiated down 66% from $13,836 to $4,695.

"This is a transformative victory for millions of seniors and other patients who rely on Medicare for affordable access to life-saving medications," said Tony Carrk, executive director of the government watchdog Accountable.US. "The Biden-Harris administration has made the well-being of millions of Americans the priority, taking a decisive step towards lowering costs for millions."

Chiquita Brooks-LaSure, administrator of the Centers for Medicare and Medicaid Services (CMS), said the agency was "proud to have negotiated drug prices for people with Medicare for the first time."

"These negotiations will not only lower the prices of critically important medications for cancer, diabetes, heart failure, and more, but will also save billions of dollars," said Brooks-LaSure. "Medicare drug price negotiation and the lower prices announced today demonstrate the commitment of CMS and the Biden-Harris administration to lower healthcare and prescription drug costs for Americans. We made a promise to the American people, and today, we are thrilled to share that we have fulfilled that promise."

"The lower negotiated prices symbolize new hope for patients on these drugs who have been forced to make impossible choices between their health, well-being, and financial stability."

Emphasizing that the pharmaceutical industry and its Republican allies had taken pains to block the negotiations from moving forward, Peter Maybarduk, access to medicines director for the consumer advocacy group Public Citizen, called the results of the talks "a major achievement."

"At last and over Big Pharma's pernicious, hand-wringing opposition, Medicare has negotiated drug prices, promising long-overdue savings for American taxpayers," said Maybarduk.

The U.S. Chamber of Commerce as well as pharmaceutical companies Merck and AstraZeneca filed legal challenges to stop the negotiations, with officials claiming that lower drug prices would harm the firms' ability to innovate and research new treatments and medications.

"That claim holds little weight as corporations' own expenditures on self-enriching activities, including stock buybacks, dividends to shareholders, and executive compensation, far exceed their investments in innovation," said Public Citizen.

In March, a federal district court judge in Delaware rejected AstraZeneca's claim that the drug negotiation program was unconstitutional, while courts in Ohio and Texas have dismissed other lawsuits—but legal challenges from the industry are expected to continue.

Despite Big Pharma's objections, the drug price negotiation program is broadly popular among voters, with 92% of Democrats, 75% of Republicans, and 81% of independent voters expressing support.

Basey said that the lowered drug prices prove "that change is possible when patients demand it"—even with the unanimous opposition of Republican lawmakers to the Inflation Reduction Act (IRA), which included the negotiation program.

"This is a significant victory, but it's only the beginning," said Basey. "As we celebrate this milestone, we remain committed to expanding the Medicare negotiation program to more drugs and fighting for additional reforms to lower drug prices for all patients who need relief."

By next February, CMS is expected to select up to 15 more drugs covered under Medicare Part D to be negotiated for a price reduction effective in 2027. Fifteen more would be selected for 2028, and up to 20 more for each year after that as required by the IRA.

While Republicans including presidential nominee Donald Trump "want to leave Big Pharma in charge so seniors pay higher prices, Democrats have delivered lower costs, more consumer protections, and accountability of drug companies that raise prices with impunity," said Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee. "These new, lower prices for prescription drugs in Medicare means seniors save money at the pharmacy counter and marks the first step in a seismic shift in the relationship between Big Pharma, taxpayers, and seniors who need affordable prescription drugs."