In August 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law by President Biden, and it included several provisions to lower drug costs for individuals with Medicare and reduce drug spending by the federal government. (For more information on the Inflation Reduction Act of 2022, please refer to IHPL’s November Policy Brief titled Inflation Reduction Act (H.R. 5376)).1,2 The IRA made improvements to Medicare by expanding benefits and lowering drug costs through improved access to affordable treatments and medications.1,3 Most notably, this law established a Medicare drug Fair Price Negotiation Program which allows the Department of Health and Human Services (HHS) Secretary to “directly negotiate the prices of certain high expenditure single source drugs without generic or biosimilar competition.”3,4
On August 29, 2023, nearly one year after the IRA was passed and enacted to law, the Biden-Harris Administration announced the first set of drugs selected for Medicare price negotiation.3,5 The first ten drugs selected are among those with the highest total spending in Medicare Part D, which accounted for $50.5 billion in total spent between June 1, 2022 and May 31, 2023, which is the time period used to determine which drugs were eligible for negoaiation.5,6 Once implemented, the prices on negotiated drugs will benefit an estimated 9 million beneficiaries who currently pay as much as $6497 in out-of-pocket costs per year for these drugs.5
The first ten drugs include:3
- Eliquis, an oral blood thinner medication (anticoagulant) taken to treat and prevent blood clots and stroke7
- Jardiance, an oral medication taken to treat type 2 diabetes8
- Xarelto, an oral blood thinner medication (anticoagulant) taken to treat and prevent blood clots and stroke9
- Januvia, an oral medication taken to treat type 2 diabetes10
- Farxiga, an oral medication taken to treat type 2 diabetes, heart failure, and chronic kidney disease11
- Entresto, an oral medication taken to treat chronic heart failure12
- Enbrel, an injection medication administered to treat rheumatoid arthritis, psoriasis, and psoriatic arthritis13
- Imbruvica, an oral medication taken to treat certain cancers (such as leukemia and lymphoma)14
- Stelara, an injection medication administered to treat psoriatic arthritis, Crohn’s disease, and ulcerative colitis15
- Fiap and NovoLog, which are injection medications administered to treat type 1 and type 2 diabetes16
Negotiations with participating drug companies listed above will occur throughout 2023 and 2024 with the intention of becoming effective January 1, 2026.5 In future years, the number of drugs subject to price negotiation will increase: 15 Medicare Part D drugs in 2027, another 15 drugs covered under Medicare Part D or Part B in 2028, and up to 20 drugs covered under Part D or Part B for 2029 and later.1,2,6 The number of Medicare beneficiaries who will see lower out-of-pocket costs in any year under this provision and the extent of savings per person will depend on which drugs are selected for negotiation, the number of beneficiaries who use those drugs, and the price reductions achieved through the negotiation process.17
Renée Chuang, M.S.
Renée completed her undergraduate education in Biochemistry and Sociology at the University of Oregon. She then received her Master of Science in Global Health at National Taiwan University. Currently, she is pursuing her DrPH in Health Policy and Leadership at Loma Linda University School of Public Health. Her research interests include patient-provider relationships and child welfare. When she is not studying, she can be found exploring local coffee shops in LA or training for a marathon.