Among the drugs seeing significant reductions is Novo Nordisk’s semaglutide, marketed as Wegovy for weight loss and Ozempic for diabetes, which will carry a new monthly price of $274. Analysts note this represents a substantial decrease from Medicare’s previous net price of $428 and far below the list price of $959 per month.

Major Price Cuts Across Multiple Therapies

Other medications targeted in this negotiation include AstraZeneca’s leukemia drug Calquence, Boehringer Ingelheim’s lung treatment Ofev, and Pfizer’s breast cancer therapy Ibrance. Each saw net price reductions exceeding $4,000 annually. Additional drugs such as GSK’s asthma and COPD inhaler Trelegy Ellipta and AbbVie’s irritable bowel treatment Linzess will now cost $175 and $136 per month, respectively, down from list prices of $654 and $539.

“These negotiations are yielding meaningful reductions,” said William Padula, a professor of pharmaceutical and health economics at the University of Southern California. “The agencies went to the table determined to push on prices, and they appear to have succeeded.”

Policy Context and Historical Background

The price negotiations stem from President Joe Biden’s 2022 Inflation Reduction Act (IRA), which marked a shift in U.S. healthcare policy by granting Medicare the authority to negotiate drug costs for the first time. Last year, Medicare finalized prices for 10 high-cost medications, achieving estimated savings of around 22%—substantially lower than the 36% projected for the 2027 rollout. Analysts attribute the larger reductions this year to newer drugs with greater pricing flexibility.

Despite these cuts, U.S. prices remain significantly higher than those in other high-income countries. The previous round of IRA negotiations showed that new prices were still, on average, more than double—and in some cases five times—the cost of equivalent medicines in nations such as the United Kingdom, Germany, France, and Japan.

International Comparisons and the Most-Favored-Nation Debate

The pricing gap has fueled discussions around “most-favored-nation” (MFN) policies, which tie U.S. drug prices to the lowest rates paid in a group of high-income countries. Former President Donald Trump supported this approach, and Medicare has proposed a pilot program using a basket of G-7 nations plus Denmark and Switzerland. Under this framework, the benchmark price would reflect the second-lowest cost within the group, adjusted for differences in GDP per capita.

The pharmaceutical industry has continued to resist government-imposed price controls. “Whether it is the IRA or MFN, government price setting for medicines is the wrong policy for America,” said Alex Schriver, spokesperson for the industry group PhRMA.

Broader Implications for U.S. Healthcare

Medicare provides coverage for more than 67 million Americans aged 65 and older, as well as people with disabilities. Experts say that the new negotiated prices could have ripple effects across the broader healthcare market. “All of the other payers can see these prices,” noted Sean Sullivan, a pharmacy professor at the University of Washington. “It creates a benchmark, and other insurers will likely demand similar reductions from manufacturers.”

The IRA requires Medicare to consider multiple factors when determining prices, including manufacturer data and the availability of alternative treatments. While international comparisons are not mandated, the legislation reflects a broader trend toward leveraging government negotiation to reduce the financial burden on patients and taxpayers.

Next Steps for Medicare Price Negotiations

Medicare officials plan to begin negotiations for a new set of 15 prescription and hospital-administered drugs in February. Observers anticipate that these discussions could further expand savings, particularly as the agency refines its negotiation methodology and targets newer, high-cost medications.

The 36% projected reduction underscores the growing role of federal oversight in U.S. drug pricing and represents one of the largest single-year efforts to lower prescription costs for the nation’s largest healthcare program. As negotiations continue, stakeholders will closely watch how these measures compare with international pricing standards and their long-term effects on both access to medicines and industry pricing strategies.

Source: Reuters – US slashes 36% off Medicare spending on 15 high-priced medicines

The post U.S. Medicare Cuts Prices on 15 High-Cost Drugs, Slashing Spending by 36% appeared first on Journos News - Breaking News, World News, Top Stories, Todays Headlines and Flash Reports.

By [Your Name] | Updated June 2, 2025

At a White House event on Monday, former President Donald Trump signed an executive order aimed at lowering prescription drug prices in the U.S.—but not without making a controversial claim. According to Trump, other countries are the reason Americans pay more for their medications.

“We were subsidizing others’ healthcare,” Trump said. “They pay a small fraction for the same drug. The European Union has been brutal. But we’re not going to tolerate profiteering and price gouging anymore.”

It’s a powerful statement, but experts say the facts simply don’t support it.

THE CLAIM:

Trump argues that the U.S. is essentially “subsidizing” cheaper drug prices in countries like those in the EU by paying many times more for the same medications.

THE FACTS: It’s a U.S. System Problem, Not a Foreign One

Yes, Americans pay more for prescription drugs. In fact, much more.

A 2024 RAND Corporation report found that U.S. drug prices were, on average, 2.78 times higher than those in 33 other high-income countries. Brand-name drugs account for most of the gap. The U.S. represented a massive 62% of global drug sales—but only 24% of actual drug volume.

So why the huge difference? Experts say it’s not because other countries are exploiting the U.S., but because of how America’s fragmented pricing system works.

“There are structural differences in the way that we price drugs in the United States,” said Mariana Socal, a health policy expert at Johns Hopkins. “Those differences are what drive the price gap.”

How Drug Pricing Works in the U.S. vs. Abroad

In most countries, a single national agency negotiates drug prices on behalf of everyone. That gives them enormous leverage. In the U.S., by contrast, pricing is negotiated separately by dozens of private insurers and pharmacy benefit managers (PBMs)—a setup that weakens bargaining power and drives up costs.

“Anything that increases negotiating power—like covering more people—puts downward pressure on prices,” explained Courtney Yarbrough, a health policy professor at Emory University.

This isn’t new. It’s the reason drug companies often push higher prices in the U.S. while accepting lower profits elsewhere. A smaller margin overseas is better than no access at all.

What Does Trump’s Executive Order Actually Do?

Trump’s order sets a 30-day deadline for drugmakers to voluntarily lower prices in the U.S. If they don’t, a new “most favored nation” pricing rule would be drafted, tying U.S. drug prices to the lowest prices in similarly developed countries.

It sounds tough, but it’s unclear how much it will affect people with private insurance, since the federal government’s control mainly extends to Medicare and Medicaid.

And no—if U.S. prices drop, other countries won’t automatically start paying more. Experts say those countries may instead cut quiet deals or negotiate steeper discounts behind closed doors.

“We’re not in a static global pharmaceutical market,” Yarbrough added.

Why Drug Prices Stay High: It’s Not Just About Foreign Nations

The real story behind high drug prices in the U.S. has more to do with corporate incentives and market exclusivity. Manufacturers, PBMs, and wholesalers all benefit financially from higher list prices. Many companies also use patents strategically to delay cheaper generics from entering the market.

“There are no saints in this industry,” said Geoffrey Joyce, health policy director at USC’s Schaeffer Center. “Everyone makes more money off of higher list prices, so they keep pushing them up.”

While Trump threatened investigations into Big Pharma at the same press event, he also offered a surprisingly friendly defense of the industry—blaming other nations for their pricing tactics instead.

BOTTOM LINE:

The U.S. isn’t subsidizing other countries’ healthcare. Americans pay more for prescription drugs largely because of how the U.S. market is structured, not because of any unfair pressure from Europe or elsewhere. Trump’s executive order may aim to tackle the issue, but blaming other countries misses the mark.

Source: AP News – FACT FOCUS: Trump blames other countries for high US drug prices. Experts say it’s not their fault

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