The US only negotiates prices for 10 drugs for Medicare and Medicaid. This should be expanded for the entire pharmacopeia.
In 2022, the Biden administration passed a historic provision under the Inflation Reduction Act, allowing Medicare to negotiate prices for 10 high-cost prescription drugs. This move was a significant step towards reducing prescription drug costs for millions of Americans, as Medicare had previously been prohibited from negotiating drug prices directly with pharmaceutical companies.
The selection of these 10 drugs was based on their high spending under Medicare Part D and their lack of generic or biosimilar competition. The negotiated prices for these drugs are expected to take effect in 2026, potentially saving the government billions of dollars over the next decade.
Expanding drug price negotiations to include the entire pharmacopeia could generate substantial savings for the federal government. Current estimates suggest that the Medicare program spends over $200 billion annually on prescription drugs. By negotiating prices for all medications, savings could potentially range from 20% to 50%, translating to $40 billion to $100 billion in annual savings. To give you an idea of the savings, Humalog Insulin would drop from $800 per box to $35.
These savings could be redirected to strengthen Medicare and Medicaid, reduce out-of-pocket costs for patients, and support other critical healthcare initiatives. Additionally, broader negotiations could drive down prices across the entire healthcare system, benefiting all Americans, not just those covered by federal programs.