Breaking Down Barriers: Affordable Medications for Seniors
A New Era in Healthcare
The Biden administration has taken a significant step towards making costly medications more accessible to seniors. On Friday, they announced the next 15 prescription drugs that will be subject to price negotiations between manufacturers and Medicare. This marks the second phase of a landmark process aimed at reducing the financial burden of healthcare for seniors.
Top Priority: Diabetes and Obesity Treatments
Leading the list are Novo Nordisk’s blockbuster diabetes injection Ozempic, weight loss shot Wegovy, and diabetes pill Rybelsus. These treatments, which share the same active ingredient semaglutide, have been difficult for patients to access due to cost, insurance coverage, and supply constraints.
The Power of Negotiation
The Inflation Reduction Act has given Medicare the power to directly negotiate drug prices with manufacturers for the first time in its nearly 60-year history. This change has been long advocated for by congressional Democrats and consumer advocates, who recognize the struggle many seniors face in affording care.
The Impact: By the Numbers
About 5.3 million people with Medicare Part D coverage used the 15 drugs in the second round of talks to treat various conditions between November 1, 2023, and October 31, 2024. These medications accounted for roughly $41 billion, or 14%, of total Part D prescription drug costs during that time period.
A Broader Reach
When combined with the 10 medications selected for the first cycle of negotiations, the 25 products represent 36% of all Medicare Part D prescription drug costs during that time period. The drugs have been on the market for at least seven years without generic competitors, or 11 years in the case of biological products such as vaccines.
Savings Ahead
Medicare has already completed negotiations for the first 10 drugs selected in the program, with new prices set to go into effect next year. The government expects these negotiated prices to save Medicare enrollees around $1.5 billion in out-of-pocket costs in 2026 alone, and lead to around $6 billion in net savings for the Medicare program in 2026, or 22% net savings overall.
Industry Pushback
The negotiation program has faced legal challenges from the pharmaceutical industry, which views the process as a threat to its revenue growth, profits, and drug innovation. However, these challenges have been unsuccessful so far.
A Growing Need
Medicare covers roughly 66 million people in the U.S., and 50.5 million patients are currently enrolled in Part D plans. Almost 10% of Medicare enrollees ages 65 and older, and 20% of those under 65, report challenges in affording drugs.
Building on Success
“Last year we proved that negotiating for lower drug prices works. Now we plan to build on that record by negotiating for lower prices for 15 additional important drugs for seniors,” said HHS Secretary Xavier Becerra. “Today’s announcement is pivotal – the Inflation Reduction Act is lowering prices for people on Medicare. HHS will continue negotiating in the best interest of people with Medicare to have access to innovative, life-saving treatments at lower costs.”
Patient Advocacy
Patient advocacy groups, such as nonprofit AARP, have applauded the announcement. “For too long, big drug companies have padded their profits by setting outrageous prices at the expense of American lives, forcing seniors to skip prescriptions they can’t afford,” AARP said in a statement. “The first round of Medicare drug price negotiation made it clear that this process will reduce the prices of these important products and create billions of dollars in savings for Medicare and its beneficiaries.”
The Road Ahead
Drugmakers will have until February 28 to decide whether to participate in the program. If a drugmaker declines to negotiate, it must either pay an excise tax of up to 95% of its medication’s U.S. sales or pull all of its products from the Medicare and Medicaid markets. Those that participate will engage in a lengthy negotiation process involving months of back-and-forth price offers with Medicare.
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