For the first time in its nearly 60-year history, Medicare began negotiating prices for ten widely prescribed drugs. Negotiations began in September 2023, and are a direct response to the recently passed Inflation Reduction Act. The proceedings, which will run from 2026 to 2028, are expected to address some of the nation’s most costly drugs. However, there is a lot of speculation regarding exactly which drugs will undergo negotiations first.
The first ten medications to be reviewed will be selected based on the highest values within Medicare’s gross spending. It is likely to include medications intended to treat diabetes and cancer. Experts predict that 40 medications will be negotiated across this 2-year period. In total, those 40 drugs generated $67.4 billion in gross Medicare spending in 2020.
Researchers also project the drugs will mostly be those covered under Part D – Medicare’s drug plan that covers retail prescriptions. The list of Part D drugs on the docket includes medications such as blood thinners and inhalers. However, Medicare will also be negotiating a few medications covered under their Part B plans. Those drugs are expected to include medications administered directly by clinicians for cancer treatment.
Lawmakers are hoping these negotiations will save the federal government more than $10 billion within the next ten years. This hopefully means that some medication costs will be reduced by around 50%. Price cuts come at a good time because many Americans have reported struggling to afford the cost of medical care as a whole. In fact, 1 in 4 older adults worry about their ability to pay for their medications.
Negotiation proceedings and the results that ensue are likely to encourage positive changes across the health care industry. More affordable pricing for some of the most sought-after drugs means patients will likely experience less stress regarding their care.
To prepare for these changes, insurers may also need to audit their provider networks to ensure the terms of their financial agreements are still valid and adequately optimized. While these price adjustments are not taking effect yet, it’s never too soon to prepare for imminent changes. If you are an insurer who wants to focus on a smooth transition amid prescription pricing changes, schedule a consultation today with TOG Network Solutions.