Joe Biden reduced prescription drug prices, but not by 60% across the board

On Nov. 2, 2020, days before that year's presidential election, then-candidate Joe Biden said he would "lower prescription drugs by 60%, and that's the truth."

He advanced toward that goal throughout his presidency, but didn't lower prescription drugs by that much across the board.

In 2022, Congress adopted and Biden signed into law the Inflation Reduction Act, part of which targeted prescription drug costs. It passed with no Republican votes.

One of the law's drug provisions, effective October 2023, increased payment incentives for physicians to prescribe what are called biosimilars — lower-cost alternatives to expensive brand-name drugs. Drugmakers now, under the law, must rebate Medicare if their prices rise faster than inflation. The law also included a provision that caps the annual out-of-pocket cost for Medicare Part D prescription drugs at $2,000 starting in 2025.

KFF estimated 1.4 million Medicare members enrolled in Part D had out-of-pocket drug costs that exceeded $2,000 in 2020, averaging about $3,355 each.

The legislation also capped Medicare enrollees' insulin prices at $35 a month in 2023; the U.S. Department of Health and Human Services estimated this would yield an annual savings of about $500 per person. After the law passed, some pharmaceutical companies — including Eli Lilly and Co., Novo Nordisk, Sanofi and Civica Rx — self-imposed price caps for all insured insulin users, not just Medicare patients.

Lastly, the law has allowed Medicare, for the first time, to negotiate prices with drug manufacturers, starting with 10 drugs in 2026. More will be added to the list each year.

The Department of Health and Human Services said in August that Medicare negotiated savings from 38% to 79% off the 2023 list prices of the 10 drugs. The reduction will yield an estimated $6 billion in savings for the federal government and a $1.5 billion reduction in out-of-pocket costs for older Americans when the lower prices take effect in 2026, according to the Biden administration. The $6 billion in savings for Medicare represents a 22% reduction in total net spending on the medications, which factors in the rebates and discounts.

Biden promised a 60% reduction, but whether that was aimed at drug costs for individuals, lower prices across many drugs, or total national spending on drugs is unclear, experts said.

"The promise of a 60% reduction is fairly vague, though there have been some improvements that might be close," said Stacie Dusetzina, a health policy professor at Vanderbilt University who studies drug pricing. "The Inflation Reduction Act does reduce what Medicare beneficiaries pay for high priced drugs and — in some cases — those reductions are even more than 60%."

For example, she said, before the law, someone with cancer could spend more than $10,000 out-of-pocket on those drugs and will pay only $2,000 in 2025. "Now, that's not everyone," Dusetzina said, "but the more someone was spending on drugs under Medicare Part D, the more they will save with that policy."

Although Biden accomplished significant changes that will substantially lessen costs for some people, health policy experts said, it falls short of a 60% reduction when applied across the U.S.' pharmaceutical marketplace.

"Has the administration taken big steps on prescription drugs that will substantially reduce prices? The answer is yes," Matthew Fiedler, a senior fellow at the USC-Brookings Schaeffer Initiative for Health Policy previously told us. But Fiedler added that it would take time before the price reductions meaningfully cut what the U.S. pays for drugs.

We rate this Compromise.