The White House has announced that major drugmakers have reluctantly agreed to negotiate on reducing the prices of 10 different medicines. This move is part of President Joe Biden’s plan to lower healthcare costs in the lead up to the 2024 election. The federal government will be using new powers granted by Biden’s landmark Inflation Reduction Act (IRA) to negotiate drug prices covered by Medicare, which is the health insurance program for individuals aged 65 and older.
The selected medicines for price negotiations include drugs used to treat serious illnesses such as diabetes and heart failure. One of the drugs, Eliquis, is an anticoagulant used by over 3.7 million Medicare beneficiaries. The government’s negotiation program is initially limited to 10 drugs, but it has the potential to expand in the future.
Pharmaceutical companies have pushed back against this initiative but have ultimately agreed to participate, citing tax penalties and potential fines as the reasons for their compliance. However, some companies, like Amgen, believe that the program is unlawful and will hinder medical progress.
Several companies have taken legal action to challenge the provisions of the IRA, arguing that the program imposes unconstitutional government-imposed price controls. Despite the resistance, the White House is viewing this agreement as a major step towards lower healthcare costs for seniors and families.
The United States currently pays significantly more for prescription drugs compared to other developed countries. According to a study by the Rand Corporation, the US pays on average 2.5 times more than countries like France. President Biden sees these price negotiations as potentially life-altering for millions of Americans struggling with high healthcare costs.
The changes in drug prices resulting from these negotiations will not take effect until January 2026. Medicare plans to negotiate prices for up to 60 drugs in the next four years, followed by an additional 20 drugs each year thereafter.
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