The government announced final prices on Thursday for the first 10 drugs negotiated by Medicare under the Inflation Reduction Act, following months of back-and-forth between pharma companies and the government.
The negotiated prices are all considerably lower than the list prices for the drugs — in many cases by more than 50%. But it’s unclear how much lower they are than the net prices, which include the rebates and discounts that are almost universally used by insurers that operate individual drug plans.
The negotiated prices announced by the US are as follows:
Earlier Thursday, the administration announced that the law would save taxpayers $6 billion in 2026 and that patients would see about $1.5 billion in out-of-pocket savings. The negotiated prices will take effect in 2026 for Medicare’s drug benefit, which covers about 50 million people, mostly senior citizens.
For the first time, the government also shared some details of the negotiations. It said that for four drugs, the government accepted revised counter-offers from companies. For five drugs, the companies accepted the government’s final written offer.
CMS described the negotiation process as “genuine” and “thoughtful” in its announcement on Thursday, noting that the government negotiated its initial offers upward following discussions with drugmakers.
But it may be hard, at least immediately, to know how much the government saved on a drug-by-drug basis. Individual drugs’ net price — what’s actually paid after the private insurers who run the program get discounts and rebates — wasn’t included in the government’s announcement.
The administration did say, however, that the $6 billion in aggregate savings it obtained were based on net prices, and that it amounted to a 22% net savings when compared to 2023.
“The negotiations were comprehensive. They were intense. It took both sides to reach a good deal,” HHS Secretary Xavier Becerra told reporters.
Pharmaceutical companies have heavily criticized the negotiation process, likening it to price setting, and several have sued to block it. PhRMA, the trade group that represents the industry, called it a politics-driven process that would not help patients.
“There are no assurances patients will see lower out-of-pocket costs because the law did nothing to rein in abuses by insurance companies and PBMs who ultimately decide what medicines are covered and what patients pay at the pharmacy,” the group said in a statement Thursday.
However, a handful of drugmakers emphasized on recent earnings calls that they’ve already factored negotiations into their near-term guidance.
“Now that we have seen the final price, we’re increasingly confident in our ability to navigate the impact of IRA on Eliquis,” Bristol Myers Squibb CEO Chris Boerner said on the company’s earnings call last month, speaking about the company’s blockbuster blood thinner.
AstraZeneca’s biopharma business unit head Ruud Dobber said in July that “even with modeling that impact, we still expect to deliver on our long-term outlook.”
Seven of the companies filed lawsuits, and five of those — from Bristol Myers, Boehringer Ingelheim, Johnson & Johnson, AstraZeneca and Novo Nordisk — have been rejected in federal courts. Those companies have all appealed.