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In February, Medicare began negotiating behind closed doors for lower drug prices

A MARTÍNEZ, HOST:

Another area where lawmakers are trying to make a real change is with the price of prescriptions for Medicare patients. Medicare is in the process of negotiating drug prices for the first time in the program's history. The bargaining has been going on since February behind closed doors. NPR pharmaceuticals correspondent Sydney Lupkin is here to tell us all about this. So, Sydney, can you put this into context for us? Why is Medicare drug price negotiation groundbreaking, exactly?

SYDNEY LUPKIN, BYLINE: It's a good question. This isn't technically the first time the government has negotiated drug prices. Veterans Affairs has been negotiating drug prices since 1993, and technically, individual plans in Medicare already do negotiate discounts. But this is the first time Medicare as a whole gets to negotiate and really use its full bargaining power. Here's Stacie Ducetstina of Vanderbilt University.

STACIE DUCETSTINA: Negotiating as one entity hopefully gives us a better deal. In addition, there are some specific rules set up about the negotiations that give us a chance to negotiate in places where we know that the prices aren't as low as they could be.

LUPKIN: Medicare Part D covers outpatient drugs for the more than 50 million seniors enrolled in it, a pretty big chunk of the population, and Medicare, that is taxpayers, spends well over $200 billion on Part D drugs every year. But most of that spending is actually on a tiny fraction of the thousands of drugs Medicare covers.

MARTÍNEZ: So why is this negotiation possible now?

LUPKIN: So the government can do this now because of a law passed by Democrats and signed by President Biden in 2022. The Inflation Reduction Act says Medicare can negotiate prices for 10 drugs that meet certain criteria. In this case, it's blockbuster blood thinners, like Eliquis and Xarelto, as well as drugs for arthritis, cancer, diabetes, and heart failure. And it's going to keep going, gradually going up to 20 drugs a year. Several drug makers have sued to stop negotiation. They've said it's not true negotiation because if a company doesn't accept the government's price, it has to take all of its drugs out of Medicare, not just the one whose price is being negotiated. So that is something to keep an eye on.

MARTÍNEZ: All right, so, how's negotiations going?

LUPKIN: There is a lot of secrecy to protect the integrity of the negotiation. I spoke to Dr. Meena Seshamani, who directs the Medicare program.

MEENA SESHAMANI: This is a historic step for the Medicare program, and we have met all of our timelines.

LUPKIN: I have also heard some grumblings of confusion, which isn't surprising since this is the first time it's happening. Negotiations started in February with the government's opening offer, and then drug makers have all since come back with counteroffers and negotiations will go through the summer. They'll end August 1 and the settled prices will be announced on September 1, right in the middle of election season. Then they'll go into effect in January of 2026.

MARTÍNEZ: Who stands to benefit from this, though? Is it just the people on Medicare taking those specific drugs?

LUPKIN: So, big picture, everybody. According to the Congressional Budget Office, negotiating drug prices in Medicare Part D is expected to save the government, which is to say, again, taxpayers, $98.5 billion over 10 years. So within Medicare, yes, those specific patients should see lower more consistent co-payments, but the Inflation Reduction Act also made some other big changes in Medicare Part D, like capping annual out-of-pocket costs at $2,000 next year. Medicare drug price negotiation is something President Biden brought up last week at a campaign stop in Philadelphia, and will definitely continue talking about. That's because Democrat and Republican voters both view high drug prices as a problem, and they want it fixed.

MARTÍNEZ: That's NPR pharmaceuticals correspondent, Sydney Lupkin. Thanks a lot.

LUPKIN: You bet.

MARTÍNEZ: Tomorrow on MORNING EDITION, we'll talk more about health care costs. Errol Anderson (ph) from Georgia has diabetes and recently saw the price of his insulin drop.

ERROL ANDERSON: $35 is still a lot of money for a lot of people. It's not enough, and people should be really mad. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Sydney Lupkin is the pharmaceuticals correspondent for NPR.
A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.