White House strikes deal to cut prices of popular Medicare drugs that cost $50 billion a year

The Biden administration is celebrating a victory after federal officials struck deals with pharmaceutical companies to lower the prices of 10 of the most popular and expensive drugs covered by Medicare, but they have not provided many details about the new price older Americans will have to pay to fill their prescriptions.

White House officials said Wednesday night they expect U.S. taxpayers will save $6 billion from the new prices, and older Americans could save about $1.5 billion on the drugs.

But those projections were based on outdated estimates, and the administration did not provide details on how the numbers were determined.

Still, the newly negotiated prices — still not available to the public Thursday morning — will affect the price of drugs used by millions of older Americans to treat diabetes, blood cancers and prevent heart failure or blood clots.

These medications include the blood thinners Xarelto and Eliquis and the diabetes medications Jardiance and Januvia.

Medicare spent $50 billion last year to cover drug costs.

This is a landmark agreement for the Medicare program, which provides health care to more than 67 million older and disabled Americans.

For decades, the federal government has had no right to negotiate drug prices with pharmaceutical companies, even though it is an everyday occurrence for private insurers.

“That meant pharmaceutical companies could essentially charge whatever they wanted for life-saving treatments that people rely on, and all Americans paid the price,” White House adviser Neera Tanden told reporters on a call Wednesday evening.

Drug trafficking will become a major issue in Vice President Kamala Harris’ presidential campaign, especially since she was the one who cast the deciding vote on the bill’s passage.

On Thursday, she and President Joe Biden will announce drug prices, their first joint speech since she replaced him as the Democratic front-runner, as they seek to convince voters that costs are coming down after years of above-average inflation.

The couple last appeared in public together to greet Americans held in Russia who were freed as part of a mass prisoner swap earlier this month.

Powerful pharmaceutical companies tried unsuccessfully to sue to stop the negotiations, which became law in 2022 when the Democratic-controlled Congress passed the Inflation Reduction Act, which changes a number of rules for prescription drugs covered by Medicare.

However, executives at those companies have made clear during earnings conference calls in recent weeks that they do not expect the negotiations to impact their financial results.

The Centers for Medicare & Medicaid Services, which oversaw the deal, is expected to release final drug prices Thursday evening.

The new prices will not come into effect until 2026.

Next year, the Department of Health and Social Care will be able to select another 15 medicines and begin price negotiations.

Before drug prices were finally set, the Congressional Budget Office estimated that these negotiations could save the federal government $25 billion by 2031.

The formal event comes a day before Harris is set to unveil part of her economic agenda Friday in North Carolina, where she plans to implement other measures that will help her cut costs and boost middle-class incomes.