HHS Announces Actions to Lower Health Care Costs and Allow Medicare to Negotiate Lower Drug Prices

The U.S. Department of Health and Human Services (HHS) announced actions to lower health care costs and implement President Biden’s lower cost prescription drug law – the Inflation Reduction Act (IRA) – which is already saving covered seniors and people with disabilities hundreds of dollars annually.

HHS released revised drug price negotiation guidance from the Centers for Medicare & Medicaid Services (CMS). The guidance is a critical step in implementing the IRA, which finally took on Big Pharma and will allow Medicare to negotiate lower drug prices on behalf of people with Medicare.

“The Biden-Harris Administration isn’t letting anything get in our way of delivering lower drug costs for Americans,” said Secretary of Health and Human Services Xavier Becerra. “Pharmaceutical companies have made record profits for decades. Now they’re lining up to block this Administration’s work to negotiate for better drug prices for our families. We won’t be deterred. President Biden made it possible for Medicare to negotiate prescription drug prices. Today’s action is a critical step in reaching that goal.”

Starting this year, Medicare will begin to negotiate directly with drug manufacturers to bring down the price of covered high-cost prescription drugs. CMS will announce the first 10 drugs selected for negotiation by September 1, 2023. The first round of negotiations will occur during 2023 and 2024. The prices that are negotiated will be effective starting in 2026.

In March, CMS released initial guidance on the process for drug price negotiation, which outlined how the agency will select drugs for negotiation this year and how those negotiations will be conducted. Today, CMS released revised program guidance, informed by public input, that outlines how CMS will negotiate to reach agreement on a maximum fair price for a selected drug with participating manufacturers, ensuring that Medicare beneficiaries have access to innovative, life-saving treatments at costs that will be lower for both them and Medicare.

HHS today also announced that President Biden’s cap on insulin costs at $35 per month will go into effect for people who get their insulin through Medicare Part B and Medicare Advantage with use of a traditional pump starting tomorrow, July 1, 2023. Millions of people with Medicare Part D are already benefiting from the Inflation Reduction Act’s $35 monthly cap on insulin costs, and if these rules for Part B and Part D had been in effect in 2020, 1.5 million beneficiaries would have saved an average of $500 per year.

More information on the Medicare Drug Price Negotiation Program is available at https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation

To read more on how the $35 insulin cap is already benefiting seniors and other Medicare enrollees across the country, visit: https://aspe.hhs.gov/reports/insulin-affordability-ira-data-point