The Biden administration took a big first step Tuesday toward reducing the cost of prescription drugs for tens of millions of Americans. It released a list of the first 10 drugs that will be subject to price negotiations with Medicare, kicking off a multiyear process that should, if all goes according to plan, lower costs for the federal government and Medicare beneficiaries. It’s good news for the public, and an exceptionally powerful asset for President Joe Biden as he makes his case for re-election.
Previously, Medicare had to accept any price set by pharmaceutical companies, which are always set high to maximize profits. But the Inflation Reduction Act, which was signed into law last year, gave Medicare authority to negotiate the price of some prescription drugs directly with manufacturers. Since Medicare coverage represents such a huge swath of the health insurance market, representing about 65 million Americans, the government will have a tremendous amount of leverage when it comes to applying pressure to drug manufacturers to reduce prices.
The list’s unveiling marks Biden’s most tangible step toward fulfilling his campaign pledge of lowering drug prices.
The list of 10 drugs includes medications for diabetes, heart disease, arthritis and cancer. They were selected through a process meant to prioritize the drugs that constitute the biggest share of Medicare spending and don’t yet face competitors. These 10 drugs accounted for about $50 billion, or 20%, of Medicare Part D spending, according to the Centers for Medicare and Medicaid Services.
Now that the list has been released, the manufacturers of the listed drugs have until Oct. 1 to decide if they want to negotiate prices with the governme