Medicare Slashes Drug Prices By 79%: What Biden’s Plan Means for You

Medicaid has negotiated down the prices of some of 10 top-selling prescription drugs by as much as 79%, a move that is expected to save billions from taxpayers.

President Joe Biden and Vice President Kamala Harris celebrated their administration’s victory.

“Big pharma has often inflated the price of life-saving medications, often charging many times what it would cost to make just to increase their profits, and millions of Americans have suffered as a result,” Harris said.

The price cuts affect diabetes drugs, blood thinners, and blood cancer medications. These cuts range from 38% to 79% and will take effect starting in 2026. While the project is expected to save $6 billion for taxpayers and $1.5 billion for some of the 67 million Medicare beneficiaries, the exact financial relief for individuals remains uncertain. The final price consumers pay at the pharmacy depends on various factors, including their specific Medicare plan, discounts, and coinsurance rates.

The Inflation Reduction Act, signed into law in 2022, was crucial to allow Medicare to negotiate prices for some of the most expensive drugs. This law barely passed in Congress, with Harris, as president of the Senate, having the tie-breaking vote to pass the act. No Republican voted for the act.

“We finally beat big pharma, and, I might add, with no help from Republicans. Not a single Republican vote for this bill, period, not one in the entire Congress,” Biden said.

Republicans, however, criticized the measure, describing the measure as “price fixing.”

“Their prescription drug price fixing scheme has accomplished just two things: driving up health care costs and crushing American innovation in medicine,” House Speaker Mike Johnson said.

In Texas, Gov. Greg Abbott also blasted the measure.

“Government price fixing is a proven failure,” he wrote on X/twitter. “The fix is to stop the trillion dollar government spending that causes the price of everything to go up—from gas to groceries to housing.”

Critics argue that lowering the prices of some medications could affect the revenue of pharmaceutical companies, disencouraging them from researching new medications. However, Reuters reported that last month, pharmaceutical companies said they did not expect a significant impact on their businesses after lowering the prices.

“It suggests to me that companies are still going to be able to make profits have incentives to innovate,” Vanderbilt University professor Stacie Dusetzina told Reuters.

Despite this, pharmaceutical companies have said that lowering the prices of medications would not solve the “biggest problem in patient affordability,” as health insurers and pharmacy benefit managers are still playing a key role in driving the prices up.

See the full list of medications affected in Reuters.