Key Takeaways:
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- Medicare Price Negotiations Curtailed: The One Big Beautiful Bill Act, signed by President Trump, introduces new provisions that delay or exclude some of the world’s top-selling drugs from Medicare price negotiations.
- Industry-Backed Loopholes: Provisions lobbied for by pharmaceutical companies will cost Medicare at least $5 billion in missed savings over 10 years, with the true cost likely higher.
- Blockbuster Drugs Affected: Cancer drugs like Merck’s Keytruda and J&J’s Darzalex, as well as Bristol-Myers Squibb’s Opdivo and Yervoy, and AbbVie’s Venclexta, will see delayed or no price negotiations, keeping out-of-pocket costs high for many seniors.
- Orphan Drug Exemptions Expanded: The law broadens exemptions for drugs first approved for rare diseases, resetting negotiation timelines and fully exempting some drugs from negotiation if they remain in orphan indications.
- Mixed Reactions: Pharma companies and some analysts say the changes reward innovation and encourage rare disease research, while critics call it a “Big Pharma Bailout” that benefits industry at the expense of patients and taxpayers.
What Happened?
The One Big Beautiful Bill Act, passed in July, quietly rewrote key rules around Medicare’s ability to negotiate drug prices. Under the new law, drugs first approved for rare (“orphan”) diseases but later expanded to broader uses will have their negotiation clock reset, delaying price relief for drugs like Keytruda. Other drugs, such as Darzalex, are now fully exempt from negotiation if they remain approved only for orphan indications. These changes were heavily lobbied for by the pharmaceutical industry and will delay or prevent price cuts for some of Medicare’s most expensive drugs.
The Congressional Budget Office estimates at least $5 billion in lost savings over a decade, but the real figure could be much higher as more drugs are affected. Patients on these drugs will continue to pay 20% of high, non-negotiated prices unless they have supplemental insurance.
Why It Matters?
The new law preserves high prices for blockbuster drugs, delaying relief for Medicare and its beneficiaries. While the industry argues this will spur innovation for rare diseases, critics warn it undermines the intent of Medicare price negotiations and shifts more costs onto seniors and taxpayers. The changes highlight the ongoing influence of pharmaceutical lobbying and the complexity of balancing innovation incentives with affordability.
What’s Next?
Expect continued debate over drug pricing reform and potential efforts to close these new loopholes. Watch for further analysis from the CBO and policy responses as the true cost of the law becomes clearer. Patients and providers will need to navigate higher costs for key therapies until at least 2027 or beyond.
