Follow the Drug Money: Medicare's Pharmaceutical Pipeline

Published February 2026 · 16 min read

The $94 Billion Pipeline

Medicare Part B doesn't just pay for office visits and surgeries — it pays for drugs administered in doctors' offices. Injections, infusions, chemotherapy, and vaccines that can only be given by healthcare professionals. Over the past decade, this drug pipeline has funneled $94.2B to pharmaceutical companies and the providers who administer their products.

And the pipeline is growing fast. Drug spending grew 123% from 2014 to 2023, far outpacing the growth of non-drug Medicare services.

The Aflibercept Story: $19.7 Billion for One Drug

Aflibercept (brand name Eylea) is an eye injection used to treat macular degeneration — the leading cause of vision loss in older Americans. Each injection costs Medicare about $742.09 per dose. Over the decade, 26.8M injections were billed to Medicare.

The total: $19.7B. To put that in perspective, the entire annual budget of the National Cancer Institute is about $7 billion. This single eye drug costs Medicare nearly 3x that — every single year.

And aflibercept isn't even the only expensive eye drug. Ranibizumab (Lucentis), another anti-VEGF injection for the same condition, added another $7.8B. Together, two eye drugs account for over $27 billion in Medicare spending.

Top 20 Drugs by Medicare Spending

The Cancer Drug Surge

Beyond eye care, cancer immunotherapy has exploded in Medicare spending. Pembrolizumab (Keytruda) — $4.7B — treats lung cancer, melanoma, and dozens of other cancers. Nivolumab (Opdivo), rituximab, and bevacizumab (Avastin) each add billions more.

These drugs save lives. But their costs are staggering, and Medicare has limited ability to negotiate prices. Part B drugs are typically reimbursed at the Average Sales Price (ASP) + 6%, giving providers a financial incentive to administer more expensive drugs — since the 6% margin is larger on a $10,000 drug than a $100 one.

The Vaccine Line Item

Notably, vaccines also rank among Medicare's biggest drug expenses. The flu vaccine ($3.7B) and pneumococcal vaccine ($2.7B) collectively cost billions — not because individual doses are expensive, but because of the sheer volume of elderly Americans getting vaccinated through Medicare.

Where This Is Heading

Drug spending's share of Medicare has nearly doubled in a decade: from 7.9% to 14.8%. New biologics, gene therapies, and weight-loss drugs (Ozempic and its successors) are poised to accelerate this trend.

The Inflation Reduction Act gave Medicare some price negotiation power starting in 2026, but it covers only a handful of drugs initially. For the vast majority of Part B drugs, the ASP + 6% model remains — and the pharmaceutical pipeline keeps flowing.

Following the drug money isn't just an accounting exercise. It's the story of how American healthcare decided that a single eye injection is worth more than most teachers earn in a year — and that Medicare would foot the bill, no questions asked.