Medicare Update: Proposed Change Could Lower Drug Costs, AARP Report Shows
Summary
AARP released a report saying that expanding Medicare's drug price negotiation program could save the government about $200 billion and lower costs for many seniors. The plan would make drug makers match the lowest prices found in similar wealthy countries, but Congress must approve the change first.Key Facts
- The report focuses on 10 expensive brand-name drugs not yet chosen for Medicare price negotiation.
- These drugs cost Medicare nearly $50 billion in 2025 and are used by over 3 million seniors.
- Using a "most-favored-nation" pricing policy could cut Medicare’s spending on these drugs from $273 billion to $76 billion between 2029 and 2033.
- Current law limits how many drugs can be negotiated, and only one of these 10 drugs will be eligible for negotiation soon.
- Prices for many brand-name drugs rise significantly after entering the U.S. market, increasing costs for seniors.
- The report suggests that matching prices paid in similar rich countries could help reduce drug costs and lower Medicare premiums.
- Implementing this policy needs approval from Congress and could face opposition from drug companies and lobbyists.
- The Inflation Reduction Act allows Medicare to negotiate some drug prices, but AARP says the program could be improved to save more money.
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