Medicare Negotiates Lower Prices for 15 Prescription Drugs

The U.S. government has announced a significant reduction in Medicare prices for 15 widely used prescription drugs, including the popular medications Ozempic and Wegovy. This decision follows extended negotiations with pharmaceutical companies and is anticipated to yield billions in savings for taxpayers and senior citizens, according to the Trump administration.

Health Secretary Robert F. Kennedy Jr. emphasized that these agreements are part of ongoing efforts to enhance affordability for Americans. The initiative to negotiate drug prices under Medicare, which began during the Biden administration, is mandated by law and aims to alleviate financial burdens on older adults.

Details of the Negotiated Prices

The new prices, set to take effect in 2027, result from a second round of negotiations established by a 2022 law allowing Medicare to negotiate the costs of the most commonly prescribed and expensive medications. This brings the total number of negotiated drug prices to 25. While the announced prices reflect a 30-day supply for each drug, the actual costs for Medicare beneficiaries will vary depending on their individual health plans and annual prescription spending.

The negotiated drugs include notable treatments such as the GLP-1 medications—Ozempic, Rybelsus, and Wegovy—recognized for their roles in weight loss and diabetes management. Other drugs involved in the negotiations are Trelegy Ellipta, which is used to treat asthma, and Otezla for psoriatic arthritis, as well as various treatments for diabetes, irritable bowel syndrome, and certain cancers.

Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, stated that the current administration has achieved “substantially better outcomes for taxpayers and seniors in the Medicare Part D program” compared to past agreements. The Biden administration previously estimated that its negotiations could have saved approximately $6 billion in net drug costs if implemented the prior year. The Trump administration’s latest negotiations are projected to save about $8.5 billion in net spending, representing a potential decrease of 36% compared to the previous year.

Impact on Medicare Beneficiaries

While the anticipated savings are significant, the actual out-of-pocket costs for Medicare beneficiaries remain uncertain. These costs depend on several factors, including individual insurance plans and usage patterns. A new regulation implemented this year caps out-of-pocket drug expenses for Medicare recipients at $2,000, providing some relief for those facing high medication costs.

The administration estimates that these changes could lead to around $685 million in out-of-pocket savings for beneficiaries enrolled in drug plans. Spencer Perlman, director of health care research at Veda Partners, noted that the improved outcomes from negotiations likely stem from the selection of drugs being negotiated and lessons learned during earlier discussions.

The high costs associated with GLP-1 weight-loss drugs have drawn particular scrutiny. Although Medicare has traditionally not covered weight-loss medications, a recent agreement between the Trump administration and pharmaceutical companies includes plans for a pilot program aimed at extending coverage to high-risk obese and overweight individuals.

As part of broader efforts, the Trump administration has also negotiated additional agreements with drug companies to reduce costs for the general population. Despite these developments, pharmaceutical companies have expressed opposition to the Medicare drug negotiations initiated by the Inflation Reduction Act, with legal actions already underway. Alex Schriver, senior vice president of public affairs at the Pharmaceutical Research and Manufacturers of America, known as PhRMA, criticized the government’s price-setting measures, stating that they could threaten future medical innovation by diverting up to $300 billion from biopharmaceutical research.

Looking ahead, Medicare is set to negotiate prices for another round of 15 drugs next year, which will include physician-administered medications for the first time.