Biden Administration’s Negotiated Drug Prices to Save $6 Billion in Medicare Costs

The Biden administration's new price negotiations for 10 top-selling prescription drugs under Medicare will save the U.S. government $6 billion in the first year. These prices, effective in 2026, will significantly impact pharmaceutical companies and are aimed at reducing high prescription costs for older Americans.

The U.S. government is set to save $6 billion in the first year from newly negotiated prices on 10 top-selling prescription drugs for Medicare, officials confirmed Thursday. Under President Joe Biden's 2022 Inflation Reduction Act, Medicare can now negotiate prices for the expensive drugs covered for 66 million Americans.

The new prices, effective in 2026, reflect cuts from the drugs' list prices—up to 79%—that do not consider any existing rebates and discounts the government may already receive. Merck & Co's diabetes drug Januvia and Novo Nordisk's insulin aspart products see the highest cuts at 79% and 76%, respectively.

While the Biden administration hopes these savings will mitigate voter concerns about high drug costs, some pharmaceutical companies argue that the cuts won't substantially lower out-of-pocket costs for patients, which are largely determined by insurers and pharmacy benefit managers. The next round of Medicare drug price negotiations will begin in February, including 15 additional drugs.

(With inputs from agencies.)