- New price negotiations will save $12 billion in Medicare drug spending.
- Discounted prices affect drugs used primarily for cancer and chronic illnesses.
- List of negotiated drugs includes Ozempic, Ibrance, and Xtandi at high costs.
The Centers for Medicare & Medicaid Services (CMS) said newly negotiated lower prices for 15 drugs will save 44%, or $12 billion, from last year’s negotiated Medicare spending. The drugs, widely used to treat cancer and other chronic conditions, include popular Ozempic.
The price drop won’t take effect for a year, starting instead on Jan. 1, 2027. That brings the total number of drugs with negotiated prices to 25, since the Biden administration negotiated lower drug prices on 10 drugs, the new prices set to be effective Jan. 1, 2026.
The new batch includes drugs to treat cancer, diabetes, asthma, and other chronic illnesses and they are some of the most costly drugs overall based on price and number of people using them for Medicare Part D.
New York Times reported that “the new prices are unlikely to lead to direct savings for most people who get their insurance through Medicare, the federal health insurance program for people over 65 as well as for many younger people with disabilities. That is largely because Medicare beneficiaries already will benefit from a cap on their out-of-pocket expenses for drugs taken at home. In 2027, those costs will be capped at roughly $2,200, depending on inflation and Medicare’s drug spending.”
The news release from the White House said both the program and those who are enrolled in Medicare will save.
“Whether through the Inflation Reduction Act or President Trump’s Most Favored Nation policy, this is what serious, fair and disciplined negotiation looks like,” said CMS Deputy Administrator and Medicare Director Chris Klomp, in the written statement.
The announcement said that in 2024, more than 5 million people with Medicare Part D used the drugs that are on the list. The cost has totaled about 15% of spending on medications — roughly $42.5 billion — during that year.
The negotiated drugs
The drugs for which the prices were negotiated in this second round include:
1. Ozempic and Rybelsus, for diabetes, $277; Wegovy, for obesity, $386
2. Trelegy Ellipta, for lung conditions, $175
3. Xtandi, for prostate cancer, $7,004
4. Pomalyst, for blood cancer, $8,650
5. Ibrance, for breast cancer, $7,871
6. Ofev, for lung conditions, $6,350
7. Linzess, for gastrointestinal conditions, $136
8. Calquence, for blood cancers, $8,600
9. Austedo and Austedo XR, for neurological diseases, $4,093
10. Breo Ellipta, for lung conditions, $67
11. Tradjenta, for diabetes, $78
12. Xifaxan, for liver and gastrointestinal problems, $1,000
13. Vraylar, for depression, $770
14. Janumet and Janumet XR, for diabetes, $80
15. Otezla, for inflammatory conditions, $1,650
Prices listed are the maximum for a one-month supply.
Promise of lower prices
Earlier this month, the White House reported that drug manufacturers Eli Lilly and Novo Nordisk had reached a voluntary agreement with the administration to drop prices on obesity drugs for people who have Medicare or Medicaid or are private-pay Americans, as Deseret News reported.
The targeted drugs in that announcement were Zepbound and Wegovy, GLP-1 drugs to treat obesity. The price was to be capped at $150 a month for the lowest dose of the drugs for both Medicare and Medicaid. The price is supposed to scale down to $250 a month for those who have no insurance and pay completely out of pocket, per ABC News.
Novo Nordisk already offers the obesity drug Wegovy directly through its website for $499 a month. Eli Lilly charges $349 for its lowest dose and $499 for higher dose Zepbound on its website. The newly negotiated prices are higher than those promised in the earlier announcement.
As the Times reported, “Christopher Krepich, a spokesman for the Centers for Medicare & Medicaid Services, said ‘due to the terms and timelines of the negotiated deals,’ the voluntary prices announced earlier this month “are expected to supersede” the prices secured through the Medicare negotiation program."