Pharma Firms Slash Medicare Drug Prices in Trump Administration Deal

The Trump administration announced that pharmaceutical companies have agreed to reduce Medicare prices on 15 prescription drugs after extensive negotiations.

These price cuts are projected to save billions for Medicare and older adults, with net price reductions scheduled to take effect in 2027. This second round of negotiations follows the implementation of the Medicare drug price negotiation program established under the 2022 Inflation Reduction Act initiated by the Biden administration.

The negotiated drugs include high-cost and widely used medications such as GLP-1 weight-loss and diabetes drugs (Ozempic, Rybelsus, Wegovy), along with treatments for asthma, arthritis, diabetes, irritable bowel syndrome, and cancer. While the announced net prices reflect savings to Medicare, individual out-of-pocket costs will vary based on specific insurance plans and beneficiary spending. Additionally, a $2,000 out-of-pocket cap for Medicare beneficiaries is now in place to help mitigate high medication costs. Experts credit the improved negotiation outcomes to refined strategies and drug selection in the second round, with estimated government savings of $8.5 billion, surpassing the $6 billion savings projected in the previous round.

However, pharmaceutical companies continue to oppose these government price-setting policies, arguing they could impact future innovation and economic competitiveness. Ongoing litigation challenges the Medicare drug negotiation program. Looking forward, Medicare plans to expand negotiations in the next round to include physician-administered drugs, aiming to further control drug spending and enhance affordability for beneficiaries.

This evolving regulatory landscape highlights the government's commitment to addressing prescription drug costs amid ongoing industry resistance and legal scrutiny.