Home Health Insurance Biden Stated Medicare Drug Value Negotiations Reduce the Deficit by $160B. That is Years Away.

Biden Stated Medicare Drug Value Negotiations Reduce the Deficit by $160B. That is Years Away.

Biden Stated Medicare Drug Value Negotiations Reduce the Deficit by $160B. That is Years Away.


We reduce the federal deficit by $160 billion as a result of Medicare will now not should pay these exorbitant costs to Huge Pharma.

President Joe Biden in his State of the Union handle, March 7, 2024

President Joe Biden has been making his case for reelection to voters by telling them he’s good for his or her pocketbooks, together with on the pharmacy counter.

Throughout his State of the Union handle, Biden mentioned laws he signed gave Medicare the ability to barter decrease prescription drug costs.

“That’s not simply saving seniors cash and taxpayers cash,” Biden mentioned, a reference to the Inflation Discount Act, which handed in 2022. “We reduce the federal deficit by $160 billion as a result of Medicare will now not should pay these exorbitant costs to Huge Pharma.” 

Biden added, “This 12 months, Medicare is negotiating decrease costs for a number of the costliest medicine.” He referred to as for giving Medicare the ability to barter costs for 500 medicine over the following decade.

In August, the federal authorities introduced the primary 10 medicine that it’s going to negotiate for decrease costs as a part of the Inflation Discount Act. A revered supply of laws evaluation tasks the change will save the federal government some huge cash, however these {dollars} haven’t been realized.

There’s a motive Biden touted this laws throughout his handle: Polling by KFF reveals that folks, no matter their political leanings, overwhelmingly help the concept of permitting Medicare to barter drug costs. However most individuals don’t know that such negotiations are underway.

Affect of Inflation Discount Act Will Take Many Years

In August 2022, Biden signed the Inflation Discount Act, which can permit the federal authorities to barter costs with drugmakers for Medicare. Biden stored his promise to repeal the legislation that barred Medicare from negotiating costs. 

The nonpartisan Congressional Price range Workplace tasks a 10-year cumulative financial savings of $161.7 billion from two provisions of the Iaw: a phased-in effort to barter with drugmakers for decrease costs and a rebate for value will increase above the general inflation charge. (The White Home has beforehand pointed to this evaluation.)

Nonetheless, not all of the financial savings will probably be everlasting. About $44.3 billion over 10 years will probably be funneled into associated provisions that broaden entry and decrease out-of-pocket prices for Medicare beneficiaries.

“Negotiations are nonetheless ramping up, so the financial savings generated by the Inflation Discount Act negotiation provisions are nonetheless sooner or later,” mentioned Matthew Fiedler, a Brookings Establishment skilled on the financial system and well being research. “The Congressional Price range Workplace did count on the inflation rebate provisions of the IRA (that are encompassed within the $160 billion) to start producing modest financial savings throughout 2023 and 2024, however there, too, a lot of the financial savings are sooner or later.”

The laws includes value negotiations for 10 brand-name medicines that lack generic equivalents. These medicine embrace the blood thinners Eliquis and Xarelto; the diabetes medicine Januvia, Jardiance, and NovoLog; Enbrel, for rheumatoid arthritis; the blood-cancer drug Imbruvica; Entresto, for coronary heart failure; Stelara, for psoriasis and Crohn’s illness; and Farxiga, a drug for diabetes, coronary heart failure, and persistent kidney illness.

The CBO has estimated that the negotiated costs will translate to just about $100 billion in federal financial savings from 2026 to 2031.

“Biden is leaping the gun on claiming financial savings for seniors,” mentioned Joe Antos, an skilled on well being care on the conservative American Enterprise Institute. “Value negotiations haven’t been accomplished; the brand new costs for chosen medicine aren’t in place till 2026.”

Biden mentioned the laws is “saving seniors cash and taxpayers cash,” which could possibly be interpreted to imply it’s saving them cash now on prescribed drugs. However the negotiations for these medicine would outline the costs to be paid for prescriptions beginning in 2026. For 2027 and 2028, 15 extra medicine per 12 months will probably be chosen for value negotiations. Beginning in 2029, 20 extra will probably be chosen a 12 months. 

That mentioned, different provisions within the laws have already led to financial savings for seniors, mentioned Tricia Neuman, a senior vice chairman at KFF:

  • Sure really useful grownup vaccines lined below Medicare Half D, reminiscent of shingles, are lined for free of charge. 
  • The act established a cap on Half D spending that begins phasing on this 12 months. This 12 months, Half D enrollees pays not more than $3,300 on brand-name medicine. In 2025, the cap for all lined Half D medicine drops to $2,000.
  • The Inflation Discount Act included the $35-a-month insulin cap, enhancements in protection for low-income beneficiaries, and the inflation rebate.

After we pressed the White Home to offer examples of financial savings which have already occurred, a spokesperson pointed to the insulin cap.

In the meantime, Antos mentioned that though the Half D rebate has kicked in, the financial savings come from a small subset of Half D medicine taken by older People and that the federal government reaps the financial savings, not older People.  

“There isn’t any motive to count on that seniors will see vital financial savings since there’s no obligation for the feds to distribute financial savings to Half D enrollees,” Antos mentioned.

Our Ruling

Biden mentioned, “We reduce the federal deficit by $160 billion as a result of Medicare will now not should pay these exorbitant costs to Huge Pharma.”

Biden’s assertion omits the time-frame; the financial savings haven’t been realized. The CBO projected 10-year cumulative financial savings of $161.7 billion from two provisions of the laws. And as for saving older People cash on their prescriptions, that hasn’t occurred but. The federal authorities is negotiating the primary 10 medicine with the brand new costs set to take impact in 2026.

We charge this assertion Half True.


KFF, “3 Charts: Medicare Drug Value Negotiations,” Jan. 31, 2024

White Home, “Price range Cuts Wasteful Spending on Huge Pharma, Huge Oil, and Different Particular Pursuits, Cracks Down on Systemic Fraud, and Makes Packages Extra Value Efficient,” March 9, 2023

E-mail interview, Matthew Fiedler, senior fellow in financial research, Heart on Well being Coverage at The Brookings Establishment, March 8, 2024

E-mail interview, Tricia Neuman, a senior vice chairman of KFF and the manager director of its Program on Medicare Coverage, March 8, 2024

E-mail interview, Joe Antos, a senior fellow on the American Enterprise Institute, March 8, 2024

White Home, assertion to PolitiFact, March 8, 2024

President Joe Biden, remarks on well being care prices, Aug. 29, 2023

Congressional Price range Workplace, “Estimated Budgetary Results of Public Regulation 117-169, to Present for Reconciliation Pursuant to Title II of S. Con. Res. 14,” Sept. 7, 2022

Congressional Price range Workplace, “How CBO Estimated the Budgetary Affect of Key Prescription Drug Provisions within the 2022 Reconciliation Act,” February 2023

KFF, “Explaining the Prescription Drug Provisions within the Inflation Discount Act,” Jan. 24, 2023

NBC Information, “Medicare Names First 10 Medicine up for Value Negotiations With the Authorities,” Aug. 29, 2023

PolitiFact, “Democrats’ Inflation Discount Act Will Permit Medicare to Negotiate Drug Costs,” Aug. 10, 2022


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