Medicare vs. Medicaid: Key Differences Between Government-Runned Programs
Although Medicare and Medicaid are both government-run health insurance programs, there are some important differences between the two.
Medicare drug price negotiations initiated by the Biden administration will finally lower drug prices for seniors starting January 1st.
The Medicare-negotiated price reductions apply to 10 drugs prescribed to treat cancer, heart disease, autoimmune diseases and diabetes. The drugs affected are Eliquis, Jardiance, Charelto, Januvia, Fasiga, Entrest, Enbrel, Imbruvica, Stelara, and Novolog.
An AARP analysis released Dec. 18 found that people with Medicare can save more than 50% on average out-of-pocket costs for these drugs under their insurance plan. According to AARP, 7 out of 10 drugs cost less than $100 per month.
The analysis looked at single Medicare prescription drug plans in five states, but AARP officials said the results are representative of what consumers across the country see.
About 9 million Americans use these 10 drugs, and the discounted prices could save consumers an estimated $1.5 billion in 2026, according to the Centers for Medicare and Medicaid Services.
With the public’s focus on affordability and rising costs of living, “all sources of savings are extremely important,” said Lee Purvis, director of prescription drug policy at AARP. “This is a huge and meaningful improvement in a world where everything costs a lot of money today.”
How does Medicare negotiate prices?
Under former President Joe Biden’s Climate and Health Care Act of 2022, the Cutting Inflation Act, Medicare was given the power to negotiate prices with drug companies for a limited number of drugs. Medicare has selected the first batch of 10 drugs and announced discounts that will be rolled out in January.
President Donald Trump and Congressional Republicans’ tax cuts and spending bill, the One Big Beautiful Bill, stripped away some climate change and clean energy tax credits, but the Trump administration appears to have embraced the Medicare drug price negotiations made possible by Biden’s Inflation Control Act.
Medicare announced in November that it would discount 15 more drugs starting in January 2027, including blockbuster diabetes and weight-loss drugs Ozempic and Wigovy. Medicare plans to select another drug in early 2026 for a third round of discount negotiations in 2028.
The health policy nonprofit KFF reported that under the One Big Beautiful Bill Act, some drugs could be delayed or excluded from negotiations, citing the cancer drugs Keytruda and Opdivo, which are widely used by Medicare patients, as examples.
President Trump touts tariffs as a way to lower drug prices
President Trump has already announced deals with several drug companies to sell other drugs at discounted prices to federal health programs and to TrumpRx, the Trump administration’s direct-to-consumer website scheduled to launch in early 2026.
President Trump touted his administration’s efforts to lower drug prices in a televised address on December 17th.
“I negotiated directly with drug companies and foreign countries that have taken advantage of our country for decades, and we lowered drug prices by 400%, 500%, even 600%,” Trump said, adding that he used the threat of tariffs to lower drug prices.
If drug prices were reduced by more than 100%, medicines would be free, but that has not happened. But the president is pressuring drug companies to lower prices to what patients would pay in other countries, a concept known as most-favored-nation pricing.
On September 30, President Trump announced that he had entered into a most-favored-nation agreement with Pfizer to sell medicines at lower prices. President Trump said in October that EMD Serono, the nation’s largest maker of fertility drugs, had agreed to reduce the price of commonly used IVF drugs.
In November, President Trump announced deals with pharmaceutical companies Eli Lilly and Novo Nordisk to reduce the prices of popular weight-loss drugs Wegoby and Zepbound and expand Medicare coverage of these drugs for seniors.
