Medicare drug price negotiation has resulted in significant cost reductions, with discounts ranging from 38% to 79%. These discounts are even larger when considering that they are off 2023 prices rather than 2024 prices. The negotiation process involved multiple meetings with drug companies where offers and counteroffers were discussed, evidence was presented, and mutually acceptable prices were determined. The exact methodology behind arriving at these prices has not been made public by CMS yet and will not be disclosed until March 2025.
Details on the negotiation process timeline can be seen below:
The setting of the Maximum Fair Prices (MFP) took into account various factors such as research and development costs, federal support, production costs, market data, and information on patents and FDA approvals. The negotiated prices will come into effect from January 1, 2026.
