Medicare Begins First Wave of Price Negotiations with Pharmaceutical Manufacturers


65 million people in the U.S. who are on Medicare are prescribed medications according to a mid-year KFF healthcare survey. 60% of these individuals are prescribed a minimum of four drugs.

The Washington Post recently published a report on the highly anticipated negotiations between Medicare and pharmaceutical manufacturers. Specifics are included in the 2022 Inflation Reduction Act.

Medicare is defined as a federal insurance benefit for individuals who are 65 or older or younger adults with disabilities. Medicare beneficiaries pay $35 per month.

A list of ten high-priced prescription drugs is part of the price negotiations. The government is attempting to lower prices in order to lift the burden on the elderly and disabled. According to the CBO, the negotiations could save Medicare over $100 billion during the next decade.

Information released by Medicare officials listed the ten high-priced drugs that are under negotiation and prescribed for millions of Medicare recipients as medication that treats diabetes and prevents blood clots.

Other medications listed treat autoimmune diseases, heart conditions, and cancer. The benefits, when approved, may not be available until early 2026.

About the Top Three

 Three of the ten drugs include Jardiance, a blood thinner used to treat heart failure and diabetes. Jardiance costs Medicare $16 billion.

The second drug on the list is Xarelto, also a blood thinner. The cost to Medicare for Xarelto is $7 billion, and the third (unnamed drug) cost Medicare $6 billion during the previous year.

Price Negotiations

If a drug is listed under Medicare’s drug benefits, there are certain criteria for price negotiations. That is if the drug does not have price competition that will lower their prices or if the drug has been sold for several years giving the manufacturer time to recoup development costs.

Other medications on the list are Januvia, Novolog, and Farxiga which are used to mainly treat diabetes. Stelara and Enbrel treat arthritis and psoriasis; Entresto has been established as an effective treatment for heart failure and Imbruvica treats cancer of the blood.

Health and Human Services estimates that in 2022 approximately nine million individuals who are enrolled in Medicare’s prescription drug benefit program are taking at least one of the ten drugs at a cost of approximately $3.4 billion.

The First Wave

The ten drugs on Medicare’s list represent the ‘first wave’ with more price negotiating to follow. If the manufacturers agree to negotiate, they must disclose revenue and what they spent on research, development, and production.

If a manufacturer will not negotiate or agree on a fair price, then it will face a tax penalty or be required to withdraw from Medicare as well as Medicaid.

Changes Are Hard to Predict

Medicare changes were adopted by Congress in 2003 that prohibited the government from negotiating prices for medicine. It was rescinded in 2022.

Since then, Medicare beneficiaries have been covered by Medicare Advantage plans.

If the negotiated prices are made public, they may affect the negotiations between drugmakers and commercial insurers who would in turn focus on the development of gene therapies and vaccines that are exempted from price negotiations longer than prescription medication.



Rose Duesterwald

Rose Duesterwald

Rose became acquainted with Patient Worthy after her husband was diagnosed with Acute Myeloid Leukemia (AML) six years ago. During this period of partial remission, Rose researched investigational drugs to be prepared in the event of a relapse. Her husband died February 12, 2021 with a rare and unexplained occurrence of liver cancer possibly unrelated to AML.

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