Does Medicare Negotiate Drug Prices? – NerdWallet

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Medicare Part D covers prescription drugs. Medicare sets the rules for Part D plans, which are sold by private companies. However, federal law currently prohibits Medicare from negotiating low prescription drug prices.

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A new law passed in August 2022 would allow Medicare to begin negotiations on the drug’s price, but not immediately.

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Here’s what you need to know about how Medicare prescription drug price negotiation works now and what’s going to change over the next few years.

Why can’t Medicare negotiate drug prices?

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The act that created Medicare Part D also prohibited Medicare from negotiating lower prescription drug prices.

Medicare Part D plans were first available in 2006, a few years after the program was created by the Medicare Prescription Drug, Improvement and Modernization Act of 2003, or MMA.[0],

MMA included a “non-interference” provision, which states that Medicare cannot do any of the following:[0],

Interfere with prescription drug price negotiations between insurance companies offering Medicare prescription drug coverage, drug manufacturers, and pharmacies.

It is required that the Part D plan includes a specific formula, or list of covered drugs.

Set prices for covered Medicare Part D drugs.

Giving Medicare the power to negotiate Part D prescription drug prices has been introduced in every session of Congress since the introduction of Medicare Part D, but none succeeded until 2022.

When will Medicare begin negotiating drug prices?

President Joe Biden signed the Inflation Reduction Act into law in August 2022. The act gives Medicare the power to negotiate the prices of certain drugs for the first time.[0],

Medicare will negotiate prices for a limited number of drugs each year starting in 2026: 10 drugs in 2026, a total of 15 in 2027, a total of 15 in 2028, and a total of 20 each year through 2029.

Which Medicare Part D drug prices will be negotiated?

Medicare will negotiate prices to qualify for the brand-name prescription drugs it has spent the most money on. According to 2020 data from the Center for Medicare and Medicaid Services, the most expensive drugs include drugs to treat the following:[0],

What other changes are coming to Medicare Part D?

Other Medicare Part D reforms to be implemented soon in the Inflation Reduction Act include the following:

If you have additional questions about Medicare, visit Medicare.gov or call 800-MEDICARE (800-633-4227, TTY 877-486-2048).



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