President Joe Biden has proposed increasing Medicare’s annual price negotiations for drugs from 20 to 50, as part of his efforts to lower U.S. drug prices. This is one of several new healthcare policy proposals that Biden will outline during his State of the Union address. The aim is to make medicines more affordable for seniors and potentially impact the profits of the pharmaceutical industry.
Currently, Medicare is limited to negotiating prices for just 20 drugs per year. However, Biden believes that Medicare should be able to negotiate prices for major drugs that seniors rely on, such as those used for heart disease, cancer, and diabetes. This proposal aligns with Biden’s goal of making healthcare more accessible and affordable for all Americans.
Lowering drug prices has been a key pillar of Biden’s health-care agenda and his reelection platform for 2024. However, the fate of these new proposals is uncertain due to a divided Congress. The pharmaceutical industry is expected to strongly oppose the increase in the number of drugs eligible for negotiations with Medicare.
The Biden administration is already engaged in a legal battle with several drugmakers over negotiations. While the administration has secured early wins in two separate cases, the industry is seeking to escalate the issue to the Supreme Court. The pharmaceutical industry’s resistance highlights the potential impact that Medicare negotiations can have on their profits.
The negotiation process began last fall when the Centers for Medicare and Medicaid Services unveiled the first 10 drugs subject to price talks with Medicare. These negotiations will conclude in the fall, with new prices taking effect in 2026. After this initial round of talks, Medicare can negotiate prices for another 15 drugs in 2027 and an additional 15 in 2028. Under the current structure, the number rises to 20 negotiated medications per year starting in 2029.
Biden’s desire for more drugs to be subject to negotiations was first mentioned last year, but Wednesday marks the first time his administration has specified a higher target number. The change is expected to save taxpayers billions of dollars and provide seniors with critical breathing room. Neera Tanden, the president’s domestic policy advisor, emphasized the potential life-saving impact of this proposal during a call with reporters.
The president’s budget includes a $200 billion cut in federal spending, which could increase the number of drugs that Medicare can negotiate and expedite the inclusion of more medicines in the negotiation process. However, the White House did not clarify whether the number of drugs would gradually rise to 50 over several years or if the new target would apply starting in 2029. The administration expressed its willingness to work with Congress on the details of the proposal.
In addition to increasing the number of drugs eligible for negotiations, Biden has proposed capping Medicare copayments at $2 for common generic drugs and extending the $2,000 cap on out-of-pocket drug costs to all private plans. The president also intends to expand a provision of the Inflation Reduction Act that requires drugmakers to pay rebates to Medicare when their drug prices rise faster than inflation. He wants this policy to apply to commercial drugs as well, not just medicines sold to Medicare.
Overall, President Biden’s proposal to increase Medicare’s annual price negotiations for drugs from 20 to 50 demonstrates his commitment to making healthcare more affordable for seniors and addressing the issue of high drug prices in the United States. However, the fate of these proposals remains uncertain, given the opposition from the pharmaceutical industry and the challenges of navigating a divided Congress.
