Wedoany.com Report-Nov. 26, The U.S. Medicare program announced on Tuesday that newly negotiated prices for 15 high-cost prescription drugs will take effect in 2027, delivering average savings of 36% compared with current net spending. The reductions are expected to lower total covered prescription costs by approximately $8.5 billion annually.

U.S. dollar banknote and medicines are seen in this illustration taken, June 27, 2024.

Among the medicines, Novo Nordisk's semaglutide (marketed as Ozempic for diabetes and Wegovy for weight management) will have a Medicare price of $274 per month in 2027. The largest price reductions apply to AstraZeneca's leukemia treatment Calquence, Boehringer Ingelheim's lung medication Ofev, and Pfizer's breast cancer drug Ibrance, each dropping by more than $4,000 from recent net prices.

Savings calculated against manufacturers' list prices (before rebates and discounts) range from 38% to 85% across the 15 drugs. The 36% average reduction in net spending exceeds the 22% achieved in the previous negotiation round for 10 drugs that will see lower prices starting in 2026.

"They were gonna go to the table and try and push on those prices, and that's what they did," said William Padula, professor of pharmaceutical and health economics at the University of Southern California.

Other notable price adjustments include GSK's respiratory inhaler Trelegy Ellipta, set at $175 monthly compared with its current list price of $654, and AbbVie's Linzess for irritable bowel syndrome, reduced to $136 from $539.

The negotiations were enabled by the 2022 Inflation Reduction Act, which for the first time allowed Medicare to directly discuss prices with pharmaceutical companies for selected medicines covered under Part D.

"These prices are going to come down below the existing net prices. There will be some real savings," said Sean Sullivan, professor of pharmacy at the University of Washington. He added that other insurance providers may reference the new Medicare rates when seeking similar terms from manufacturers.

Medicare serves more than 67 million Americans, primarily those aged 65 and older as well as individuals with certain disabilities. The program's next negotiation cycle, covering another 15 medicines, is scheduled to begin in February.

The announced prices remain higher than those available in several other high-income countries, where centralized purchasing systems have long secured lower rates for the same medications. The Inflation Reduction Act requires Medicare to consider factors such as research costs, clinical benefits, and availability of therapeutic alternatives, but does not mandate comparison with international pricing.

Industry representatives have expressed concern about government involvement in pricing. "Whether it is the IRA or MFN, government price setting for medicines is the wrong policy for America," said Alex Schriver, spokesperson for pharmaceutical trade association PhRMA.

The latest agreements demonstrate continued progress in Medicare’s effort to secure more affordable rates for widely used treatments while maintaining access for beneficiaries.