U.S. reaches deal to reduce cost of 10 drugs for Medicare beneficiaries

President Joe Biden said he wants to stop giving pharmaceutical companies a “blank check” after the government announced a deal to dramatically lower the cost of 10 common prescription drugs for millions of Americans.

Price cuts of between 38 and 79 percent will take effect in 2026, the Centers for Medicare & Medicaid (CMS) said.

They will apply to people enrolled in the Medicare program, which provides health coverage to Americans aged 65 and older.

The new policy is expected to cover about nine million people who take at least one of these drugs, the health ministry said.

At an event in Upper Marlboro, Maryland, President Joe Biden said Thursday he no longer wanted to give big pharmaceutical companies a blank check and described the deal as “relief for the millions of seniors who take these drugs to treat everything from heart failure to blood clots to diabetes to arthritis to Crohn’s disease and so much more.”

He said the changes were part of the Inflation Reduction Act, passed by Democrats in 2022 with a tiebreaking vote by Vice President Kamala Harris, which allows Medicare to negotiate drug prices directly with manufacturers.

The public announcement of the prescription drug price cut marked the first joint public appearance by Ms. Harris and Mr. Biden since he withdrew from the race last month.

Xavier Becerra, secretary of the U.S. Department of Health and Human Services, said the agreement represented the first direct negotiation between Medicare and pharmaceutical companies.

“The American people are better off for it,” Becerra said.

The U.S. Department of Health and Human Services has estimated that the policy would save Medicare about $6 billion ($4.7 billion) if enacted today, based on last year's drug prices.

In a hypothetical example provided by the department, a Medicare enrollee using the Crohn's disease treatment drug Stelara, which is one of 10 negotiated prescription drugs, would see his or her bill reduced from $3,400 to $1,100 for a 30-day supply.

Medicare is a national health insurance program funded by the United States government. It subsidizes health services for people aged 65 and over, as well as for younger people with certain disabilities.

For prescription drugs, patients pay a portion of the cost, while Medicare helps cover part of the cost.

The Biden administration said the new cuts would save $1.5 billion in out-of-pocket costs for prescription drugs in 2026.

Last year, Tina Romney, 56, told the BBC that her husband had to pay $800 per prescription for Entresto, one of the drugs the Biden-Harris administration has cut.

Knowing the costs were reduced was a “relief,” she said. “I had a few years to get there.” [Medicare coverage]but now I know I don't have to worry about the cost when I do it.”

Covered drugs include the widely used diabetes treatments Januvia and Jardiance, the blood thinners Eliquis and Xarelto, and the leukemia drug Imbruvica.

Junuvia faces the biggest price drop, from $527 in 2023 to $113 in 2026.

Linda Jones, 73, who takes Junuvia, said the announcement was “a big deal, as you get older you shouldn't have to live your life in fear”.

Drugmakers, however, have warned that patients will still have to pay high prices out of pocket.

Bristol Myers Squibb, the maker of Eliquis, said lowering its drug's price won't address the “biggest affordability issue for patients,” which is out-of-pocket costs set by health insurers.

Johnson & Johnson, the company that makes Stelara and Xarelto, has also warned that patients will face higher costs down the road.

The pharmaceutical industry has previously fought attempts to block price negotiations with Medicare and has sued the Biden administration over its cost-cutting plan, arguing it is unconstitutional.

That lawsuit, however, was dismissed in February by a federal judge, marking a victory for President Biden.

The policy announcement comes as Democratic presidential nominee Harris campaigns for the White House at a time when high living costs and inflation are top of mind for Americans.

According to the Pew Research Center, health care accounts for about 8% of Americans' spending.

A study released in February by the RAND Corporation, a California-based think tank, found that drug prices in the United States are on average three to four times higher than in 33 other countries, including the United Kingdom and neighboring Canada.

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