The Medicare negotiation program, a key component of Project 2025—a collection of right-wing initiatives aimed at transforming the U.S. government—seeks to repeal the existing law that enables the federal government to negotiate lower prices for prescription drugs. This program is poised to bring significant savings to older adults and the Medicare system. However, its future remains uncertain amidst potential legal challenges and political shifts.
Currently, the savings from this program apply exclusively to those using one of ten selected drugs, including Eliquis, Enbrel, and NovoLog. These medications have list prices of $521, $7,106, and $495, respectively. The administration forecasts that the negotiated prices will save older adults $1.5 billion in out-of-pocket costs and $6 billion for the Medicare program. By 2027, the program will extend to encompass 15 additional drugs, followed by another 15 in 2028 and 20 more each subsequent year.
Notably, over 8 million Medicare enrollees are currently using one or more of these negotiated drugs. The federal government can continue expanding its negotiations to include more drugs annually, as mandated by the Inflation Reduction Act (IRA). This act also introduces a $2,000 annual cap on out-of-pocket prescription drug costs, scheduled to commence next year. The savings generated from the Medicare negotiation program are anticipated to cover this cap.
Implementing these new pricing structures for Medicare Part D plans will require time. The program's impact extends to what patients, the government, and Medicare Part D plans will pay. However, there is a looming risk that drugmakers could disrupt the program if they succeed in their lawsuits challenging the Medicare negotiation initiative.
“Ultimately, these cases will come before the Supreme Court, which has been hostile to health and safety regulation,” – Gostin
The uncertainty surrounding the program's future is compounded by President Trump's ambiguous stance on the IRA and the Medicare negotiation provision. If elected again, his administration might dismantle the price negotiation program.
“If President Trump wins the election, he might dismantle the price negotiation program,” – Gostin
Despite these uncertainties, experts underscore the importance of the changes already underway. The benefit change slated for 2025 is expected to significantly improve the situation for seniors. By then, the negotiated prices might not drastically alter costs for frequent medication users but will benefit everyone utilizing Medicare Part D.
“It’s important to realize that 2025’s benefit change will have already improved the situation for seniors, so that by the time the negotiated prices go into effect, it might not change the cost to people who use the medications more, but it will help everyone who uses Medicare Part D.” – Dusetzina
The relief offered by the anticipated $2,000 cap on out-of-pocket costs cannot be overstated. Many beneficiaries find solace in knowing that their financial exposure to high drug costs is limited.
“Just the idea of not having to pay more than $2,000 is a huge relief because you never know when you’re going to be prescribed a really expensive drug,” – Neuman
While some individuals taking these drugs are expected to see savings, the magnitude of these savings can vary based on their specific plans—whether coinsurance or copayment models are in place.
“People who take these drugs are expected to see savings, but the amount is going to vary from plan to plan, and whether or not they’re in a plan that charges a coinsurance versus a copayment,” – Neuman
Broadly speaking, the benefits of drug pricing negotiations extend beyond individual savings. Lower drug costs have a ripple effect throughout the healthcare system.
“To me, the most important benefits of the drug pricing negotiations are that lower drug costs will filter down to benefit everything with lower prices," – Gostin
Interestingly, public sentiment largely favors reduced prescription drug prices. However, the path forward remains precarious due to potential political and legal obstacles.
“Lower prescription drug prices are hugely popular among the public, but the future is uncertain,” – Gostin
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