Kennedy Says Medicare Drug Price Talks Were ‘Poorly Structured’

The Biden-era Medicare Drug Price Negotiation Program was poorly structured and has ended up raising costs for the government, US Health Secretary Robert F. Kennedy Jr. told senators Thursday.

“The Medicare drug negotiations in the IRA were very well intentioned, but they were poorly structured,” Kennedy said at a hearing before the Senate Finance Committee.

“The negotiations that have occurred actually have ended up raising the cost for Medicare,” Kennedy added, citing data from the Centers for Medicare & Medicaid Services.

Kennedy’s comment that prices are rising surprised Sen. Catherine Cortez Masto (D-Nev.), who pointed out the Congressional Budget Office estimate said the opposite. The office estimates $100 billion in savings over 10 years from drug negotiations.

The agency last year under former President Joe Biden also said it expects Medicare to save $6 billion on the 10 high-cost medications selected for the first round of negotiations when the prices go into effect in 2026. The government also projects patients will save $1.5 billion from the deals.

But some studies have shown that the true extent of savings are unclear because the government compared negotiated prices with list prices, which Medicare wasn’t originally paying as drugs were subject to rebates.

Masto pressed Kennedy on the plans to lower drug prices after President Donald Trump’s tax-and-spending law included a provision to keep certain rare disease drugs from being subject to negotiations.

The provision in the Republicans’ bill passed in July exempts drugs with multiple rare disease indications from negotiations, which could keep cancer drugs like Merck & Co. ‘s Keytruda from being selected for cuts.

Kennedy said he’s “not sure” about the provision under the bill, but knows his office is negotiating “most favored nation” prices to lower the costs of drugs.

The Medicare negotiation program, created under Biden’s signature Inflation Reduction Act, seeks to lower US drug costs by allowing the government to be in talks with manufacturers over certain drug prices.

The program has gained support from the Trump administration, implementing the negotiations and doubling down on other efforts to bring down prescription drug prices.