In a bold move to address the rising cost of prescription drugs, the Biden-Harris administration has rolled out significant reforms to lower medication expenses for millions of Americans on Medicare.
The initiative, fueled by the Inflation Reduction Act, is set to go into effect in 2026 and will target some of the most expensive and commonly prescribed medications for conditions such as heart disease, diabetes and cancer.
While the plan has been promoted as a significant win for seniors who bear the brunt of high prescription costs, it’s clear that this is also a calculated political strategy to capture the critical senior vote ahead of upcoming elections. The reforms offer financial relief to seniors and align with the administration’s broader goals of improving healthcare affordability.
Massive Savings on Key Drugs
Under the new plan, the administration has selected ten high-cost drugs for price negotiations, which could lead to dramatic savings. These price cuts will offer some Medicare beneficiaries substantial reductions in out-of-pocket expenses. One striking example is Eliquis, a drug used to prevent blood clots. The cost of Eliquis will drop from $521 to $231 per 30-day supply. Similarly, Stelara, a drug for conditions like psoriasis, will plummet from $13,836 to $4,695 for a 30-day supply.
According to a fact sheet from the White House, these newly negotiated prices are expected to cut the list prices of these drugs by 38-79%, resulting in billions of dollars in savings for Medicare and its beneficiaries.
Aiming for Senior Votes with Financial Relief
The administration’s focus on lowering drug costs is widely viewed as a strategic move to secure the support of the senior population, who make up a significant portion of the voting base. Medicare.gov explains that starting in 2025, seniors will finally get some financial relief with a $2,000 annual cap on out-of-pocket costs. This change is a big help for retirees who often struggle to keep up with their healthcare expenses.
The administration has also already delivered on capping insulin costs at $35 per month, which has benefited millions of Medicare Part D enrollees. This cap has provided a lifeline to seniors managing diabetes and is a key talking point in the administration’s healthcare strategy.
Broader Medicare Reforms on the Horizon
The Biden-Harris administration is also working to extend its healthcare cost-cutting measures beyond Medicare. Proposals to expand the $2,000 cap to private insurance plans are in the works, and the Fiscal Year 2025 budget aims to accelerate drug price negotiations further. Expanding this negotiation program will add more drugs to the list in 2025, potentially increasing the number of beneficiaries who will experience substantial savings.
The Centers for Medicare & Medicaid Services (CMS) describes these negotiations as groundbreaking. For the first time, Medicare can directly negotiate prices for select high-cost brand-name drugs under Part B and Part D, even when these drugs lack competition. This reform marks a significant shift in Medicare’s approach to managing drug costs.
No-Cost Vaccines and Monthly Payment Plans
The Inflation Reduction Act also eliminates cost-sharing for vaccines recommended by the Advisory Committee on Immunization Practices, including those for shingles and whooping cough. This move already provides immediate benefits to Medicare beneficiaries who previously had to pay out-of-pocket for vaccines.
Starting in 2025, the Medicare Prescription Payment Plan will allow seniors to break down their out-of-pocket drug costs into manageable monthly payments rather than paying everything at once. This new approach is intended to reduce the financial strain many seniors experience when they need to refill their prescriptions. The plan is specifically designed to relieve them from the stress of covering the entire out-of-pocket cost upfront.
Opponents Chime In
Critics of the Inflation Reduction Act’s drug pricing reforms argue that the policy could negatively impact pharmaceutical innovation and limit access to medicines. The pharmaceutical industry, for example, has expressed concerns that allowing Medicare to negotiate drug prices will have a chilling effect on research and development. Industry representatives claim that the requirement to accept government-set prices or be excluded from Medicare and Medicaid undermines competition and amounts to a “taking” of their property.
They argue this process could ultimately reduce the availability of new drugs for patients, as companies might abandon projects that would otherwise bring groundbreaking treatments to market. Furthermore, critics contend that price controls could discourage companies from expanding research efforts or introducing certain medications in the U.S., thus reducing options for Medicare beneficiaries and stifling innovation in the long run.
A Calculated Play for Senior Votes
With millions of seniors standing to benefit from the price cuts, the Biden-Harris administration is positioning itself as the party that prioritizes the healthcare needs of older Americans.