Medicare officials announced on Nov. 25 the negotiated prices for 15 of the program’s most expensive drugs, anticipating a 44 percent decrease compared to last year’s price, resulting in potential savings of $12 billion. The new prices are scheduled to go into effect at the start of 2027.

Annual price negotiations, started under the Biden administration’s 2022 Inflation Reduction Act (IRA), allow the Centers for Medicare & Medicaid Services (CMS) to bargain directly with pharmaceutical companies, which had been prohibited under the law.

“As we work to Make America Healthy Again, we will use every tool at our disposal to deliver affordable health care to seniors.”

Negotiated savings range from 38 to 85 percent.

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

Biggest price drops include AstraZeneca’s leukemia treatment Calquence, Boehringer Ingelheim’s lung drug Ofev, and Pfizer’s breast cancer medication Ibrance—each decreased by more than $4,000 annually from expected net prices.

GSK’s Trelegy Ellipta for asthma and COPD decreased to $175 from $654, and AbbVie’s Linzess for irritable bowel syndrome dropped to $136 from $539.

“They are getting more efficient with their methodology,” though this year’s batch of products had “more wiggle room” in terms of price, Padula said.

The drugs treat asthma, cancer, and diabetes, and accounted for $41 billion in Medicare Part D costs from November 2023 to October 2024.

The industry has criticized the practice of yearly price negotiations.

“Whether it is the IRA or MFN [most-favored-nation], government price setting for medicines is the wrong policy for America,” Alex Schriver, a PhRMA spokesperson, said.

Medicare serves more than 67 million elderly and disabled Americans, and this development could influence broader markets.

“These prices are going to come down below the existing net prices. There will be some real savings,” Sean Sullivan, a University of Washington pharmacy professor, said.

“All of the other payers can see them. What is going to stop them from asking manufacturers for that same price?”

U.S. prices still outpace the rest of the world. After last year’s negotiations, Pfizer-Bristol Myers Squibb’s blood thinner Eliquis and Amgen’s arthritis drug Enbrel remained at prices more than double— sometimes five times—those in other wealthy nations.

The IRA mandates take into account manufacturer data and alternatives, but do not include global rates.

President Donald Trump has called for “most-favored-nation” pricing, defining it as matching the lowest rates among OECD nations with a GDP per capita at least 60 percent of the United States.

Negotiations for 15 more drugs, including hospital-administered ones, begin in February.