In a significant move to lower healthcare costs, the U.S. Department of Health and Human Services (HHS) has selected 15 additional drugs for Medicare price negotiations under the Inflation Reduction Act (IRA). Led by the Centers for Medicare & Medicaid Services (CMS), this second round builds on last year’s initial success, which yielded notable price reductions for 10 high-cost medications.
The New Roster: A Step Forward
The 15 newly selected drugs include widely used treatments for conditions such as type 2 diabetes, cancer, and asthma. Collectively, they accounted for $41 billion—or 14% of Medicare Part D’s total gross prescription drug costs—between November 2023 and October 2024, used by about 5.3 million people with Medicare Part D during that same period.
Here’s the full list:
- Ozempic, Rybelsus, and Wegovy: GLP-1 receptor agonists widely used for managing type 2 diabetes and, in Wegovy’s case, obesity.
- Ibrance: A targeted therapy for breast cancer, often combined with other treatments.
- Trelegy Ellipta: A triple-combination inhaler for COPD and asthma, offering more convenient disease management.
- Xtandi: Advanced prostate cancer treatment that inhibits androgen receptors, slowing cancer cell growth.
- Pomalyst: A lifeline for multiple myeloma patients who have not responded to other therapies.
- Ofev: Used to treat idiopathic pulmonary fibrosis and other progressive fibrosing lung diseases.
- Linzess: A therapy that helps regulate bowel movements in IBS-C and chronic idiopathic constipation.
- Calquence: A next-generation BTK inhibitor for certain blood cancers, offering improved tolerability.
- Austedo and Austedo XR: Addresses movement disorders such as Huntington’s disease and tardive dyskinesia.
- Breo Ellipta: An inhaler for long-term COPD and asthma management, combining a corticosteroid and a long-acting beta agonist.
- Tradjenta: A DPP-4 inhibitor used to lower blood sugar in type 2 diabetes.
- Xifaxan: Treats IBS-D and hepatic encephalopathy, reducing both gut-related and neurological symptoms.
- Vraylar: An antipsychotic with indications for bipolar disorder and schizophrenia.
- Janumet and Janumet XR: Combines metformin with a DPP-4 inhibitor to improve blood sugar control in type 2 diabetes.
- Otezla: An oral option for psoriatic arthritis and moderate to severe plaque psoriasis.
Drug manufacturers with a selected medication must confirm their participation in these negotiations by February 28, 2025. Negotiated prices are slated to take effect in 2027 and could yield substantial out-of-pocket savings for Medicare beneficiaries. By building on the first negotiation cycle’s average price cut of 22% (with individual reductions ranging from 38% to 79%), CMS estimates that these measures will save Medicare roughly $6 billion annually.
Historical Context: The Inflation Reduction Act’s Milestone
Passed in 2022, the IRA represented a watershed moment by granting Medicare the authority to negotiate drug prices for the first time. The goal is to ease the financial burden on seniors and taxpayers grappling with steep prescription costs. Early outcomes from the first negotiation cycle—which will see new prices go into effect in 2026—suggest significant savings for millions of seniors, with an estimated $1.5 billion reduction in out-of-pocket costs in the first year alone.
Another key IRA provision is the $2,000 annual out-of-pocket cap for Medicare Part D enrollees. Set to take effect in 2025, this measure is projected to benefit 11 million beneficiaries, with average savings of about $600 per enrollee. Those without financial assistance may save an average of $1,100. These savings are critical for those on fixed incomes and for whom management of chronic illness is a a major concern.
Successes of Medicare Price Negotiations
- Cost Savings for Seniors: Millions of beneficiaries are expected to experience direct financial relief.
- Industry Accountability: By factoring in clinical benefit and production costs, the negotiations push drug manufacturers to justify their pricing.
- Broader Access: Lower prices should improve access to essential medications for many who previously struggled to afford them, improving health outcomes and providing additoinal savings.
Challenges and Limitations
- Delayed Implementation: A two-year lag between negotiation and implementation can blunt the immediate effects of price cuts or give time for prices to increase for non-Medicare customers.
- Restricted Scope: While groundbreaking, current rules apply only to select Medicare-covered drugs, leaving many costly medications out of reach and not requiring any broader retail pricing reform.
- Industry Pushback: Ongoing legal challenges and lobbying from pharmaceutical companies may slow expansion of the program and changes in the presidential adminstration may allay future negotiations.
- Systemic Inequities: Lower prices alone cannot fix underlying disparities in healthcare access and research funding that still plague the discovery and development pipeline for new drugs.
Looking Ahead: The Path to Sustainable Reform
The addition of 15 more drugs to Medicare’s price negotiation list marks a crucial step forward. However, to maximize its impact, policymakers and industry leaders must:
- Expand the Scope: Incorporate more high-cost drugs, including those covered under Medicare Part B.
- Balance Innovation and Affordability: Collaborate with pharmaceutical companies so that cost controls do not impede the development of new therapies and future negotiations are unnecessary.
- Address Health Disparities: Pair price reductions with broader measures to eliminate inequities in healthcare access.
A Step in the Right Direction
The IRA’s expanded Medicare drug price negotiations promise to ease financial burdens for seniors while holding drug manufacturers more accountable. Though significant hurdles remain—ranging from implementation delays to industry opposition—these early successes pave the way for a more equitable, sustainable healthcare system. By continuing to refine and expand these policies, lawmakers and stakeholders can ensure that lifesaving treatments remain both innovative and accessible for the people who need them most.
Stay curious!