The federal government has the authority to negotiate the prices Medicare pays for certain drugs.
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The Biden administration, on its last full weekday in office, announced the next 15 drugs that will be subject to Medicare price negotiations. The blockbuster diabetes drug Ozempic is on the list.
That means the federal government and the pharmaceutical industry are about to clash again. The Centers for Medicare and Medicaid Services negotiated prices for an initial batch of drugs last year — something they were only able to do because of the Inflation Reduction Act, passed in 2022 .
“Once again, we have a chance to negotiate a better deal for the American people,” Health and Human Services Secretary Xavier Becerra said in a statement. “We believe we can succeed again.”
The 15 new drugs combined with the 10 drugs in the first batch account for about a third of Medicare Part D spending on prescription drugs, Becerra said.
“It’s important to remember that for some people, this is a big deal,” Becerra said. “Some people have to cut the number of pills in half or skip a dose in their prescription so they can extend their prescription until they can afford to buy the next batch of medication.”
The White House announced the first round of negotiated prices for Medicare drugs in August, after negotiating reduced prices for months. The 10 new price cuts – which ranged from a 79% reduction for type 2 diabetes drug Januvia to a 38% reduction for cancer drug Imbruvica – will take effect in January 2026.
Choosing medications
The government cannot choose just any drug under Medicare. Certain rules set out in the Inflation Reduction Act indicate which drugs are eligible. for price reductions.
They cannot be new, for example, and cannot compete with generic or biosimilar products.
The government had until February 1 to announce the next batch of drugs. And he had to use data from January 15 to make his drug selection.
Friday’s announcement comes a few weeks before that deadline, but the administration has been very early in meeting its deadlines in the past. It also may be the last day the Biden administration can tout its work to lower prescription drug prices.
Possible obstacles under Trump
The new Trump administration could, in some way, hinder the negotiation on drug prices. It could repeal all or part of the Inflation Reduction Act – which gives Medicare that negotiating power.
That’s the plan, according to Project 2025, published by the conservative Heritage Foundation and authored by several people at one time in Trump’s orbit, including Roger Severino, who served as director of HHS’s Office of Civil Rights from 2017 to 2021.
Until a Republican-controlled Congress can repeal the Inflation Reduction Act, Project 2025 suggests implementing the existing law in a way that minimizes its effects.
However, since Trump tried to distance himself from the 2025 project, it is really unclear what will happen.
The pharmaceutical industry also has lawsuits pending challenging the law.
Next steps
Drugmakers have until the end of February to sign an agreement stipulating that they will participate in this round of negotiations. They then have a certain amount of time to submit data on things like research and development costs, sales and revenue.
The government will make its opening offer on June 1, but it will remain secret. Negotiations will continue until Halloween, when companies will accept or reject the government’s final offer.
The negotiated costs will be made public about a month later and then take effect in January 2027.
