See also
The Inflation Reduction Act of 2022 enabled Medicare to negotiate prices for prescription drugs for the first time in the program’s history. In August 2023, Medicare announced the first 10 Medicare Part D drugs selected for negotiation. The U.S. Centers for Medicare and Medicaid Services submitted its initial offer for negotiated prices in February 2024, and the negotiated prices will be finalized and published in September 2024. The negotiated prices will take effect in January 2026. These 10 drugs are among those with the highest annual Medicare Part D spending, indicating very high prices and/or very high utilization rates. Given limited transparency in drug pricing, it is often difficult to estimate drug costs, especially because net prices, which are often unknown, differ from list prices and vary among payers.
This new Center for American Progress analysis builds on net per-unit Medicare Part D drug price estimates from the Commonwealth Fund, inclusive of discounts, rebates, and price concessions, to estimate net Medicare prices for a typical 30-day supply of the first 10 drugs up for price negotiation. From there, the center calculated the likely monthly savings that will result from Medicare’s price negotiation.
CAP estimates that 30-day net price reductions for negotiation-eligible drugs could range from a low of $30 for insulin product NovoLog FlexPen to a high of $6,548 for cancer drug Imbruvica. (see Table 1)
Roughly 9 million Medicare Part D beneficiaries take these 10 drugs. Subsequently, even small per-person reductions in monthly prices can amount to millions of dollars in annual Medicare savings. For example, price negotiation of Eliquis could result in a price reduction of $123 for a 30-day supply. Given that more than 3.5 million Part D beneficiaries use Eliquis, this would add up to significant monthly and annual Medicare savings.
Conclusion
Medicare drug price negotiation will meaningfully lower the prices Medicare pays for prescription drugs. Medicare and its Part D beneficiaries could save thousands on a 30-day supply of some of the negotiated drugs. Each year, Medicare will negotiate the prices of additional prescription drugs, totaling a cumulative 80 drugs by 2030. The benefits of drug price negotiation will only compound over the years, totaling $25 billion through 2031 and reducing beneficiary costs through lower premiums and cost sharing.
Methodology
Per the Inflation Reduction Act of 2022, the U.S. Department of Health and Human Services has begun the negotiation process for the first 10 Medicare Part D drugs. Negotiated prices will take effect in 2026. The Commonwealth Fund published estimated per-unit net retail prices for each of these drugs that account for rebates to Medicare Part D plans, based on data from IQVIA and rebate assumptions from MedPAC. One unit of drugs in the Commonwealth Fund’s analysis is 1 tablet of drug administered in solid form (Eliquis, Entresto, Xarelto, Januvia, Jardiance, Farxiga, and Imbruvica) and 1 milliliter (mL) of drug administered in liquid form (NovoLog FlexPen, Enbrel, and Stelara). While different forms of the same drug will all be subject to Medicare price negotiation, the author used the same names as the Commonwealth Fund for each listed medication.
The author estimated monthly doses of each listed drug using the National Institutes of Health Daily Med database. For medications in tablet form, the author used the standard number of tablets taken each day and assumed the strength of each tablet was the same as the Commonwealth Fund IQVIA estimates. For NovoLog, the author estimated the dosage based on the INITIATE study and assumed the more conservative estimate of 5 units (distinct from the 1 tablet of 1 mL unit used by the Commonwealth Fund) twice a day. In the case of drugs with different doses for varying indications, the author used the dosage that applied to the most indications or, when the dosage remained unclear, the more conservative estimate. For drugs not taken at a consistent dose every day, week, or month, the author assumed a patient took the drug over the entire year and estimated the 30-day supply as the total dosage taken over the course of a year divided into 30-day periods.
The author multiplied a drug’s unit price by the estimated number of units used in 30 days. To estimate 30-day net prices before and after negotiation, the author multiplied this 30-day net price by the 50 percent average reduction projected by the Congressional Budget Office.
While the net price data published by the Commonwealth Fund is for NovoLog FlexPen specifically, the author assumed that the price estimates were similar for all NovoLog and Fiasp products included in negotiation. While the IQVIA data used by the Commonwealth Fund is from 2021, the authors include 2022 utilization estimates to provide context for a more precise look forward.
The author would like to thank Stephanie Ducas, PharmD; Justin Immerman, PharmD; and Elisabeth Donahey, PharmD for their expertise.