In a groundbreaking move, the Biden administration has taken a significant step towards lowering prescription drug costs for Americans. As part of President Joe Biden’s Inflation Reduction Act, the administration has initiated negotiations between Medicare and drugmakers to set new prices for the first 10 medications. This move is expected to save the Medicare program around $6 billion and provide $1.5 billion in out-of-pocket savings for beneficiaries in 2026 alone.
But this is just the beginning. Future rounds of negotiations will likely involve more widely used drugs from major pharmaceutical companies, potentially leading to even greater cost savings. According to Leigh Purvis of AARP, people should see this as just the start, with more drugs being included in negotiations in the future.
One key aspect of these negotiations is the potential impact on pharmaceutical companies. As drugs near patent expirations, competition from cheaper generics could further drive down prices and revenue for these companies. For example, Bristol Myers Squibb’s Eliquis is set to lose patent exclusivity in the U.S. in 2028, potentially leading to increased pressure on the company.
Looking ahead, the Biden administration is expected to select up to 15 more drugs for the next round of negotiations by February 2025. Companies that choose not to participate could face steep excise taxes or lose access to federal Medicare and Medicaid programs. As the negotiations progress, more pressure may be applied to the pharmaceutical industry, potentially impacting drug development and innovation in the long term.
Overall, these negotiations mark a significant milestone in the ongoing effort to lower prescription drug costs in the U.S. While there are concerns about the potential impact on the pharmaceutical industry, the Biden administration remains committed to using Medicare’s negotiation powers to benefit both taxpayers and older Americans. Stay tuned for more updates on this evolving situation on Extreme Investor Network.