Biden, Harris strike major pharma deal to cut Medicare drug prices

The Biden administration this week has negotiated deals with major pharmaceutical companies to lower the prices of 10 of Medicare’s most widely used and expensive drugs. While federal officials have yet to disclose the exact new prices, the administration projections cited by the Associated Press claim that US taxpayers will save approximately $6 billion annually.

These estimates, however, are based on earlier projections.

What does it mean?

Despite the lack of immediate transparency, the expected price reductions are likely to benefit millions of older Americans who rely on these drugs for managing conditions such as diabetes, blood cancer, heart failure, and blood clots.

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This deal marks a crucial milestone for the Medicare programme, which serves over 67 million older and disabled Americans. For decades, the federal government was prohibited from negotiating drug prices with pharmaceutical companies, a common practice among private insurers.

White House adviser Neera Tanden said: "This meant that drug companies could basically charge whatever they want for life-saving treatments people rely on, and all Americans paid the price."

Which drug prices will be lowered?

Among the drugs included in the negotiations are the blood thinners Xarelto and Eliquis and the diabetes medications Jardiance and Januvia. In 2023, Medicare spent $50 billion on these medications alone.

Vice President Kamala Harris, who cast the tie-breaking vote to pass the law enabling these negotiations, will play a key role in promoting the deal as part of her presidential campaign. She and President Joe Biden are scheduled to announce the new drug prices together on Thursday (August 15).

But there is a catch

While some pharmaceutical executives have suggested that the negotiations may not significantly impact their profits, the final drug prices are set to be released by the Centers for Medicare and Medicaid Services later on Thursday. However, these new prices will not take effect until 2026.

(With inputs from agencies)