The Trump Administration has announced the latest round of covered drugs and maximum fair prices under the Inflation Reduction Act’s Medicare Drug Negotiation Program for initial price applicability year 2027. In a new insight, Director of Health Care Policy Michael Baker breaks down the second round of maximum fair price results and warns that these aggregated, theoretical savings based on retrospective data continue to tell only one aspect of the entire Medicare landscape.

Key points:

• The 15 Part D drugs were selected because of either high program spending or high beneficiary utilization.
• The administration’s touted $12 billion in savings (an approximately 44-percent reduction in net Part D spending if the prices had been in place for 2024) are nearly double the initial year of savings under the Medicare Drug Negotiation Program.
• While the savings seem significant, further analysis of the announcement identifies calculated inefficiencies, an overrepresentation of benefits, and the continued lack of evidence that any savings will truly materialize in Part D.

Read the analysis.