President Joe Biden and Vice President Kamala Harris announced on Thursday that the United States has successfully negotiated Medicare drug price cuts for 10 top-selling prescription drugs, with reductions as steep as 79%.
This move, enabled by Biden’s Inflation Reduction Act of 2022, marks the first time Medicare has been allowed to negotiate prices for some of the most expensive drugs covered by the program, which serves 66 million Americans.
The new prices, aimed at easing public frustration over high healthcare costs, are expected to save the government $6 billion in the first year and will take effect in 2026.
Speaking at an event in Largo, Maryland, Biden celebrated the victory, declaring, “We finally beat Big Pharma.” Vice President Harris, whose tie-breaking vote in the Senate was pivotal in passing the legislation, emphasized the administration’s commitment to lowering prescription drug costs for Americans, a key issue as the 2024 elections approach.
The new Medicare drug price cuts include reductions for Merck’s diabetes drug Januvia (79%) and Novo Nordisk’s insulin aspart products (76%). The administration projects that these cuts will also save Medicare beneficiaries $1.5 billion in out-of-pocket costs in 2026.
While the pharmaceutical industry has expressed concerns that the price cuts could stifle innovation, experts like Vanderbilt University’s Stacie Dusetzina believe that the savings won’t be so drastic as to harm the industry’s profitability or incentive to innovate.
