Biden says Medicare drug-price talks will save taxpayers $6 billion in first year

The Biden administration on Thursday estimated that taxpayers will save $6 billion in the first year of its Medicare drug-price negotiation program.

President Biden announced the expected savings after extensive talks between the government and companies that make the 10 high-cost drugs selected for the first round of price negotiations.

“People on Medicare will save $1.5 billion in out-of-pocket costs for their prescription drugs and Medicare will save $6 billion in the first year alone,” Mr. Biden said. “It’s a relief for the millions of seniors that take these drugs to treat everything from heart failure, blood clots, diabetes, arthritis, Crohn’s disease, and more — and it’s a relief for American taxpayers.”

Mr. Biden’s push to negotiate down drug prices through Medicare was included in signature 2022 legislation known as the Inflation Reduction Act. Democrats who fought for decades to wield government power against drug prices hailed it as a milestone.

Though the prices won’t take effect for over a year, Mr. Biden’s party is eager to crow about progress against high costs in an election year dominated by talk of pocketbook pressures and inflation.

“For decades, the American people wanted fair negotiations with Big Pharma, and because of the IRA, they got it. Now the American people are seeing the results,” Senate Majority Leader Charles E. Schumer, New York Democrat, said Thursday.

The program will negotiate down the cost of at least 10 drugs starting in 2026 before expanding to 15 drugs the following year and, incrementally, more drugs in successive years.

Additional drugs from Medicare Part D and the doctor-administered Part B program will be selected in subsequent years.

Mr. Biden is expected to promote the effort with Vice President Kamala Harris — the Democratic presidential nominee against former President Donald Trump — at a stop in Maryland later Thursday.

“From my time as attorney general of California and a U.S. senator, I have consistently worked to lower the costs of prescription drugs and fought to protect patients,” Ms. Harris said.

The Congressional Budget Office estimates the drug-negotiation program will save taxpayers $100 billion through 2031 while modestly curtailing the share of new drugs coming to market by around 1%. It predicted about $3.7 billion in the first year of the program, meaning administration estimates would exceed the projection.

The pharmaceutical industry hates the program and sued to try and stop it.

They say the process is akin to extortion — not negotiation — because drugmakers have no choice but to accept price talks or else withdraw from the robust Medicare program that enrolls more than 60 million seniors.

The industry and Republican allies say Mr. Biden’s program amounts to socialist-style price setting and will lead to fewer cures coming to market. Former President Donald Trump is pushing alternate ways to reduce costs for seniors, including zero taxes on Social Security benefits.

The administration says drugmakers agreed to participate and had ample opportunity to propose prices.

“The negotiations were comprehensive. They were intense. It took both sides to reach a good deal,” Health and Human Services Secretary Xavier Becerra said.

Promoters of Mr. Biden’s program say it will reduce seniors’ out-of-pocket costs and could spill over into negotiations between employer plans and drugmakers, though it is unclear if that will happen.

The Pharmaceutical Research and Manufacturers of America, a key industry lobby, said consumers will be disappointed because the program doesn’t target middlemen, known as pharmacy benefit managers, who play a key role in the chain from drugmakers to consumers.

“There are no assurances patients will see lower out-of-pocket costs because the law did nothing to rein in abuses by insurance companies and PBMs who ultimately decide what medicines are covered and what patients pay at the pharmacy,” PhRMA President and CEO Steve Ubl said.

The drugs selected in the first round were Eliquis by Bristol Myers Squibb, Jardiance by Boehringer Ingelheim, Xarelto by Janssen Pharmaceuticals, Januvia by Merck, Farxiga by AstraZeneca, Entresto by Novartis, Enbrel by Immunex Corp., Imbruvica by Pharmacyclics LLC, Stelara by Janssen Biotech and a series of insulins made by Novo Nordisk — Fiasp, Fiasp FlexTouch, Fiasp Penfill, NovoLog, NovoLog FlexPen and NovoLog Penfill.

The savings estimates are based on what would have happened if negotiated prices had been in effect in 2023. The negotiated prices are a 38% to 79% discount from the original list price, depending on the drug.

The administration said 1.8 million Medicare enrollees used Jardiance, a diabetes drug, making it the most commonly used prescription on the list.

Its list price of $573 for a 30-day supply was negotiated down to $197, a 66% cut, according to the Centers for Medicare and Medicaid Services.

Another diabetes drug, Januvia, was negotiated down to $113 from $527, a 79% drop, and insulin products on the list dropped to $119 from $495, or 76%.

Some decreases were less drastic as a percentage, though they involved higher dollar amounts.

Imbruvica, which treats blood cancers, dropped to $9,319 for a 30-day supply from $14,934, a 38% cut.