Medicare's Major Drug Price Overhaul: Savings and Implications

Medicare has announced newly negotiated prices for 15 high-cost drugs, predicting a 36% savings in prescription spending by 2027. These savings, amounting to $8.5 billion, highlight the impact of the Biden administration’s Inflation Reduction Act. Analysts are closely monitoring price comparisons with international standards.

In a groundbreaking move, the U.S. Medicare health plan announced on Tuesday significant reductions in the prices of 15 of its most expensive drugs. The overhaul is expected to yield a 36% savings, cutting net covered prescription costs by around $8.5 billion annually when the new prices are implemented in 2027.

Some of the drugs affected include Novo Nordisk's semaglutide, GSK's Trelegy Ellipta, and AbbVie's Linzess. With Medicare covering over 67 million Americans, mainly those aged 65 and above, the price reductions position the U.S. closer to international pricing standards, a practice endorsed by previous administrations.

This decision follows last year's introduction of maximum prices for 10 high-cost drugs, driven by the Biden administration's Inflation Reduction Act. Despite the pharmaceutical industry's resistance, Medicare's drug price negotiations are expected to extend to more drugs next year, highlighting ongoing efforts to manage healthcare expenses.

(With inputs from agencies.)