President Biden signed the Inflation Reduction Act into law on August 16, 2022
The law that created Medicare's power to negotiate drug prices is the Inflation Reduction Act, signed by President Joe Biden. The bill passed through both the U.S. House of Representatives and the U.S. Senate before reaching the President's desk. It became law without a veto and took effect when ready, though the actual drug price negotiations did not begin until later.
This was not a standalone bill about drug prices. The Inflation Reduction Act addressed multiple topics — climate spending, tax credits, and healthcare costs among them. The drug negotiation provision was one section within a much larger piece of legislation. Understanding who signed it matters because it shows the law came from the executive branch, not from Medicare itself or from a private organization.
Key Takeaways
- President Biden signed the Inflation Reduction Act on August 16, 2022, which gave Medicare the legal power to negotiate drug prices with pharmaceutical manufacturers.
- The bill passed both the House and Senate before the President signed it, meaning it went through the full legislative process.
- The drug price negotiation section was part of a larger law addressing inflation, climate, and taxes — not a bill focused only on medicine costs.
- Medicare did not begin actual price negotiations with drug makers until 2023, more than a year after the law was signed.
How the law moved through Congress
The Inflation Reduction Act passed the Senate on August 7, 2022, and the House on August 12, 2022. The vote in the Senate was 51 to 50, with Vice President Kamala Harris casting the tie-breaking vote. The House vote was 220 to 207. Both votes were largely along party lines, though the bill had support from Democrats and opposition from Republicans.
After both chambers passed their versions, the bill went to President Biden for his signature. He signed it four days after the House vote. Once signed, it became federal law without needing any further action from Congress or any other body.
What the drug negotiation section actually does
The part of the law that affects drug prices allows Medicare to negotiate directly with pharmaceutical companies on the cost of certain medications. Before this law, Medicare was prohibited from negotiating — it had to pay whatever price drug makers set. The new rule applies to drugs that have been on the market for a certain length of time and that Medicare spends a large amount of money on each year.
The negotiations began in 2023 and the first set of negotiated prices took effect in 2024. Medicare selected ten drugs for the first round of negotiations. The list grows each year as more drugs become may be able to access. The goal is to lower what Medicare pays, which can reduce out-of-pocket costs for people on Medicare who take these drugs.
Why this matters for Medicare beneficiaries
Before the Inflation Reduction Act, Medicare Part D (prescription drug coverage) had no mechanism to push back on drug prices. Manufacturers set the price, and Medicare paid it. This meant drug costs for seniors could rise sharply year to year with no negotiation happening on Medicare's side.
The law does not set prices directly — it does not say "this drug must cost $50." Instead, it gives Medicare a seat at the table to negotiate, similar to how the Veterans Health Administration and Medicaid already negotiate drug prices. The actual prices that result depend on the negotiation between Medicare and each drug maker. Some drugs may see larger price reductions than others.
Timeline of events from signing to first negotiations
| Date | Event |
|---|---|
| August 7, 2022 | Senate passes the Inflation Reduction Act |
| August 12, 2022 | House passes the Inflation Reduction Act |
| August 16, 2022 | President Biden signs the law |
| 2023 | Medicare begins negotiating prices with drug makers |
| 2024 | First set of negotiated drug prices takes effect |
How to learn about your drugs are part of the negotiation program
Medicare publishes a list each year of the drugs selected for price negotiation. You can find this list on Medicare.gov. The drugs chosen are typically high-cost medications that Medicare spends significant money on across all beneficiaries. Not every drug is included — only those that meet certain criteria about cost and how long they have been available.
If you take a drug that is on the negotiated list, the lower price should show up in your Part D plan's formulary (the list of covered drugs and their costs). You do not need to do anything to benefit from the negotiation — the lower price is built into the plan. If you want to know whether a specific drug you take is part of the program, you can search the Medicare negotiated drug list or call Medicare at 1-800-MEDICARE.
What happened after the law was signed
After President Biden signed the law, pharmaceutical companies challenged it in court. Some manufacturers argued that the negotiation process violated their rights or was unconstitutional. These legal cases have moved through federal courts, and some have resulted in temporary blocks on certain parts of the law, though the core negotiation power has remained in place.
Despite legal challenges, Medicare moved forward with selecting drugs for negotiation and began talks with manufacturers. The first negotiated prices were announced in 2023 and went into effect in 2024. The program continues to expand, with more drugs becoming may be able to access for negotiation each year as they meet the time-on-market requirement.
Frequently Asked Questions
Can drug companies refuse to negotiate with Medicare?
Drug makers can refuse to negotiate, but the law includes a penalty: if they refuse, Medicare can exclude that drug from coverage under Part D. This creates strong incentive to negotiate, though some manufacturers have challenged the law in court arguing the penalty is unfair.
Does the negotiation law explore to all Medicare drugs?
No. The law applies only to drugs covered under Medicare Part D (prescription drug plans) and only to drugs that have been on the market for a certain number of years and that Medicare spends a large amount on. Drugs covered under Part B (administered in a doctor's office or hospital) are not included in the negotiation program.
Will my drug costs go down when ready after the law was signed?
No. The law was signed in August 2022, but negotiations did not begin until 2023, and the first negotiated prices did not take effect until 2024. Even now, not all drugs are included — only those selected for each year's negotiation round.
Who decided which drugs would be negotiated first?
Medicare, working with the Centers for Medicare & Medicaid Services (CMS), selected the first ten drugs for negotiation based on criteria in the law: high cost to Medicare, number of beneficiaries using them, and how long they have been on the market. The list expands each year.
What if I disagree with a negotiated price?
The negotiated prices are set between Medicare and the drug manufacturer — individual beneficiaries do not negotiate. If you believe your out-of-pocket cost is too high, you can talk to your doctor about lower-cost alternatives or contact your Part D plan to discuss your coverage options.