The U.S. Department of Health and Human Services (HHS) announced on August 15 that it has reached agreements with pharmaceutical manufacturers on the first round of Medicare prescription drug price negotiations. These agreements come almost a year after the Centers for Medicare & Medicaid Services (CMS) announced the first 10 drugs covered under Medicare Part D selected for this cycle of negotiations.

According to CMS, people enrolled in Medicare prescription drug coverage would save an estimated $1.5 billion in out-of-pocket costs once the negotiated priced go into effect in 2026. Altogether, the 10 drugs, which treat a variety of ailments including cancers and clotting, accounted for $56.2 billion in total Medicare spending, or about 20% of total Part D gross spending in 2023.

The ability for HHS to negotiate prescription drug prices was authorized in the Inflation Reduction Act, which was signed into law on August 26, 2022. Moving forward, CMS will select up to 15 more drugs covered under Part D for negotiation for 2027 by February 1, 2025. The prices reached during those negotiations would take effect in 2027.

More information on the Medicare Drug Price Negotiation Program can be found here.