The first-ever negotiations between the federal government and pharmaceutical companies have led to agreements that will lower the prices of 10 treatments, reducing costs for the Medicare program and for some individual seniors, the Biden administration announced early Thursday morning.

This round of negotiations began in 2023 and took place because of the Inflation Reduction Act , the law that Democrats in Congress passed on a party-line vote and that President Joe Biden signed two years ago. The new prices are for drugs covering a variety of conditions, including diabetes and inflammatory illnesses, and are set to take effect in January 2026.

The negotiation process is going to happen each year, with a new set of drugs each time. If all goes to plan, that means the scope of drugs subject to negotiated prices will grow each year, while the savings will accumulate.

When these lower prices go into effect, people on Medicare will save $1.5 billion in out-of-pocket costs for their prescription drugs and Medicare will save $6 billion in the first year alone, Biden said in a prepared statement, citing figures that analysts at the U.S. Department of Health and Human Services calculated and published on Thursday. Its a relief for the millions of seniors that take these drugs to treat everything from heart failure, blood clots, diabetes, arthritis, Crohns disease, and more and its a relief for American taxpayers.

Of course, those numbers refer to aggregate savings on drug spending. Figuring out what they will mean for individual Medicare beneficiaries is difficult, because so much depends on peoples individual circumstances like which drugs they take, or which options for prescription coverage they use.

It also depends on knowing the actual, real prices for these drugs today, after taking into account the discounts that private insurers managing Medicare drug plans extract from manufacturers. Those discounts are proprietary information that the federal government cannot release.

But its possible to get a rough sense of how individual drug prices will change, using estimates that outside analysts have produced.

For Eliquis , a Bristol Myers Squibb drug that nearly 4 million Medicare beneficiaries take to treat blood clots, the current net price for a 30-day supply is about $309, according to calculations that researchers published this summer in the Journal of Managed Care .

The new, federally negotiated price for a 30-day supply is $231.

We all know that Americans pay too much for their prescription drugs, HHS Secretary Xavier Becerra told reporters on a conference call. That makes todays announcement historic.

Drug Prices As A Campaign Issue

The timing of Thursdays announcement is a function of the Inflation Reduction Act, which requires the annual negotiating process to end by Sept. 1. But it is also taking place less than three months before the November elections, when voters will have a chance to choose between two very different visions and records on prescription drug prices.

Giving the government more leverage over drug prices has been a longtime cause of Democrats , especially more liberal Democrats. That very much includes Vice President Kamala Harris , who is now the Democratic nominee for president.

Harris issued her own statement Thursday morning, noting that she had cast the tiebreaking vote to pass the bill in the Senate. Every American should be able to access the health care they need no matter their income or wealth, she said.

On Thursday, Harris and Biden are set to appear together in Maryland to promote the negotiations, as well as some other reforms from the Inflation Reduction Act that are already taking effect.

The same people who benefit from having lower negotiated prices may also get savings from other improvements to the Medicare drug benefit, such as the new $2,000 cap on out-of-pocket drugs costs and the $35 monthly cap on insulin costs, Tricia Neuman, senior vice president at the health policy research organization KFF, told HuffPost on Thursday.

Republicans, none of whom voted for the Inflation Reduction Act, have long opposed giving the government leverage over drug prices. Project 2025 , which the right-wing Heritage Foundation published as a governing blueprint for a second Trump presidency, calls for repealing the negotiation power.

Trump himself, over the years, has criticized the drug industry and said he would support price negotiation. But while he was president, he backed Republican leaders in the Senate who refused to consider drug pricing legislation that was moving through Congress at the time.

Polling has consistently shown that voters support giving the government more power over drug prices. It has also shown that large numbers of voters still dont realize the government now has some of that power or that the Inflation Reduction Act is the reason.

That undoubtedly has something to do with the fact that the power is relatively limited (it applies only to some drugs, and only for Medicare). Its probably also a result of the complexities involved.

In an interview with HuffPost, Becerra said some confusion is understandable and inevitable given the complications of the American health care system. But he said history proves that Americans appreciate these sorts of reforms once they take effect.

People werent sure what would happen when we kept telling them the price of your insulin is going to drop, Becerra said. Go talk to those seniors on fixed income, now that they are paying no more than $35 for their months supply of insulin. Its a big deal.

Drug Prices As A Policy Debate

The U.S. has been an international outlier when it comes to drug pricing. Across Europe and Asia, the governments of other economically advanced countries have long had some kind of power to negotiate or set prices for drugs.

Not coincidentally, people in those countries pay a lot less for name-brand prescriptions than Americans do.

But defenders of Americas system have long argued that giving the federal government similar leverage over prices could have serious downsides, especially when it comes to innovation.

In their telling, the high prices Americans pay for drugs through taxes, insurance premiums and out-of-pocket expenses drive industry profits that attract investment that, in turn, underwrites the development of breakthrough drugs.

Companies are already changing their research programs as a result of the law, and experts predict this will result in fewer treatments for cancer, mental health, rare diseases and other conditions, Steve Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, said Wednesday when the announcement was imminent. Medicine development is a long and complex process, and the negative implications of these changes will not be fully realized for decades to come.

Many independent analysts agree that revenue levels can affect innovation, though even many of them doubt the specific reforms in the Inflation Reduction Act would deter research and development.

And as this years negotiation process moved forward, with the federal government and companies exchanging offers and finally settling on prices, manufacturers themselves have been telling investors they are not especially worried about the effects on their bottom lines.

Now that we have seen the final price, were increasingly confident in our ability to navigate the impact of IRA on Eliquis, Christopher Boerner, CEO at Bristol Myers Squibb, said on an earnings call last month .

Becerra cited statements like Boerners as proof that fears about less innovation are without basis.

We started at a particular price, they started a particular price, we ended at a negotiated price this was a negotiation every sense of the word, Becerra said. I think these companies will continue to do business at least, thats what theyre telling Wall Street and were telling Medicare beneficiaries and taxpayers that were saving you billions of dollars.