NEW YORK (AP) — Pharmaceutical companies have agreed to slash the Medicare prices for 15 prescription drugs after months of negotiations, reductions that are expected to produce billions in savings for taxpayers and older adults, the Trump administration said.
However, the prices revealed for a 30-day supply of each drug do not reflect what Medicare recipients will actually pay at their pharmacies. Those costs will depend on individual plans and annual prescription expenses.
Health Secretary Robert F. Kennedy Jr. commended the agreements, emphasizing the administration’s efforts to tackle affordability concerns among Americans. The Medicare drug negotiation program began under the Biden administration and is now implemented by the Trump administration.
“President Trump directed us to stop at nothing to lower health care costs for the American people,” Kennedy stated. “As we work to Make America Healthy Again, we will use every tool at our disposal to deliver affordable health care to seniors.”
The announcement concludes a second round of negotiations under a 2022 law enabling Medicare to negotiate the prices of some of the most popular and costly prescription drugs, bringing the total negotiated to 25. The new agreements will become effective in 2027, and reduced prices from the inaugural 10 drugs negotiated last year will begin in January.
Price Negotiations Target Key Medications
The latest price adjustments involve high-cost medications that Medicare frequently prescribes, such as popular GLP-1 drugs for diabetes and weight loss (Ozempic, Rybelsus, and Wegovy), asthma treatments (Trelegy Ellipta), psoriatic arthritis drug Otezla, and various medications for diabetes, irritable bowel syndrome, and certain cancers.
Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, remarked that the administration achieved “substantially better outcomes for taxpayers and seniors in the Medicare Part D program” compared to previous negotiations.
In the first round of negotiations conducted by the Biden administration, potential net savings of approximately $6 billion were projected. The Trump administration estimates the latest round could save about $8.5 billion.
It remains uncertain how much Medicare beneficiaries will save on out-of-pocket costs for prescriptions due to individual factors affecting pricing, but a new rule cap limits their costs to $2,000 annually. The estimated total savings for seniors with drug plans is about $685 million.
Spencer Perlman, director of health care research at Veda Partners, indicated that improved outcomes likely arise from a favorable mix of negotiated drugs and insights gained from the previous year’s negotiations.
Medicare's Coverage of Weight-Loss Drugs Still in Question
The high costs associated with the GLP-1 drugs have drawn scrutiny. Although these drugs were negotiated, Medicare currently does not cover weight-loss treatment. A new initiative from the Trump administration aims to pilot expanded coverage for select high-risk obese individuals.
Additionally, the administration has completed several other unrelated agreements with pharmaceutical companies to lower overall medication costs for the general public.
Meanwhile, the pharmaceutical industry has filed lawsuits challenging the Medicare negotiation provisions established by the 2022 Inflation Reduction Act.
“Whether it is the IRA or MFN, government price setting for medicines is the wrong policy for America,” stated Alex Schriver from the Pharmaceutical Research and Manufacturers of America (PhRMA). “These flawed policies also threaten future medical innovation by siphoning $300 billion from biopharmaceutical research, undermining the American economy and our ability to compete globally.”
Next year, Medicare will undertake negotiations for another 15 drugs, which will include physician-administered medications for the first time.
