Medicare Price Cuts Coming for Major Diabetes Medications

On Tuesday, August 29, the White House revealed the names of the first 10 drugs that will be subject to new Medicare price negotiations. These new negotiations should lead to lower costs for Medicare recipients, perhaps very big ones. Several are diabetes drugs:

Jardiance (empagliflozin)
Januvia (sitagliptin)
Farxiga (dapagliflozin)
Fiasp (insulin aspart)
NovoLog (insulin aspart)

Why Are Prices Falling?

The new price negotiations were enacted by the Inflation Reduction Act, which squeaked through Congress on party lines in August 2022. It was a huge bill, affecting tax, energy, climate — and healthcare. The act made people with diabetes a major focus.

Initially, Democrats hoped that the act would cap insulin copayments at $35 per month for all Americans with private insurance, but, despite some bipartisan support, that provision failed in the Senate. That setback aside, the Inflation Reduction Act still promised big savings for many seniors with diabetes:

Reduced Medicare copays for insulin. Medicare recipients should now pay a maximum of $35 per month for insulin (although some newer insulins may not be covered).
Limited out-of-pocket spending on prescription drugs to $2,000

Before these changes took effect in 2023, an analysis by Yale academics found that nearly 20 percent of Medicare recipients using insulin reached “catastrophic” levels of spending to pay for their medicine.

Finally, the act also allowed the federal health secretary to negotiate the price of a small number of important, expensive drugs. The first drugs to undergo this new cost-cutting process have now been revealed.

Which Diabetes Drugs Will Receive Price Cuts?

The diabetes drugs to receive price cuts are:

Jardiance (empagliflozin)
Januvia (sitagliptin)
Farxiga (dapaglizlozin)
Fiasp (and other Novo Nordisk insulins, including NovoLog)

Jardiance and Dapagliflozin are both SGLT2 inhibitors. These drugs help lower blood glucose levels by preventing the kidneys from reabsorbing sugar in the bloodstream, causing extra sugar to leave the body in a patient’s urine. SGLT2 inhibitors have become increasingly popular as a first-line medication for type 2 diabetes because they have been shown to protect against both kidney and heart disease. They are also occasionally used off-label for type 1 diabetes.

Januvia is a DPP-4 inhibitor that helps to regulate blood sugar by stimulating insulin secretion and inhibiting glucagon secretion.

Fiasp is a newer ultrarapid insulin that works faster than Humalog or NovoLog. Some insurers, including state Medicare plans, may not fully cover Fiasp because it is considered a fancier, more expensive alternative to NovoLog.

NovoLog, a traditional rapid insulin administered before meals or for blood sugar corrections, may also receive a price renegotiation.

The Biden administration evidently identified these as some of the most important overpriced drugs for American seniors. Some experts have been puzzled by the choices, however. Farxiga and Januvia, for example, are scheduled to lose exclusivity in 2026, the year that price changes would first take effect, at which point cheap generics should become swiftly available.

The other drugs to receive price negotiations will be:

Eliquis (apixaban), which prevents stroke and blood clots
Xarelto (rivaroxaban), which prevents stroke and blood clots
Entresto (sacubitril/valsartan), a heart failure treatment
Enbrel (etanercept), which treats psoriasis and arthritis
Imbruvica (ibrutinib), a leukemia treatment
Stelara (ustekinumab), for psoriasis, ulcerative colitis, and Crohn’s disease

When Will Prices Drop?

It’s going to take a while. According to CNBC, the new prices won’t take effect until 2026 — assuming that legal challenges do not scuttle the Biden administration’s plans in the meantime, that is. Several pharmaceutical manufacturers have brought lawsuits seeking to challenge the rule, and the battle could reach the Supreme Court.

We’ll know a little bit more by October 1 — that’s the deadline for manufacturers to signal whether they’ll willingly participate in negotiations. Drug makers that choose not to negotiate can be penalized with extremely high taxes, and Medicaid and Medicare could also drop drugs from their formularies. Spokespeople for the pharmaceutical industry argue that their businesses are being illegally coerced to accept below-market prices.

How Much Will Prices Drop?

According to CNN, the Centers for Medicare & Medicaid Services (CMS) will offer to pay “at least 25 percent to 60 percent” below the average manufacturer’s price, depending on the drug in question. A month’s supply of Januvia, for reference, can easily cost over $500 without insurance.

Though the savings may not seem overwhelming today, this is only the first round of negotiation between CMS and drug manufacturers. The Inflation Reduction Act allows the government organization to negotiate the price of increasing numbers of drugs in coming years. The Congressional Budget Office expects the savings to total $100 billion over the next decade.

“Big Pharma is charging Americans more than three times what they charge other countries simply because they could,” said President Joe Biden. “I think it’s outrageous. That’s why these negotiations matter.”


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