Activists protest prescription drug prices in front of the U.S. Department of Health and Human Services building on October 6, 2022 in Washington, DC.
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The Biden administration will release prices Thursday for the top 10 prescription drugs that require landmark negotiations between drugmakers and Medicare, a milestone in a contentious process aimed at keeping older Americans Expensive medications are more affordable.
The government estimates that the new negotiated drug prices will generate about $6 billion in net savings to the Medicare program in 2026 alone, when Officially effective. This is an estimated savings based on price Senior government officials told reporters on Wednesday whether the measures would take effect in 2023.
The Biden administration also projects that the new prices will save Medicare beneficiaries $1.5 billion in out-of-pocket costs in 2026 alone.
Chiquita Brooks-Rassoul, administrator of the Centers for Medicare and Medicaid Services, told reporters: “For many people, being able to afford these drugs will mean the difference between living with a disease and living a fulfilling life. “These are negotiated prices. They’re not just about cost. They’re about helping to ensure that your father, your grandfather, or you live longer and healthier.”
One day earlier marked the second anniversary of President Joe Biden’s signing of the Inflation Reduction Act, which gave Medicare the power to negotiate drug prices directly with manufacturers for the first time in the federal program’s nearly 60-year history.
The government announced the first batch of drugs to participate in price negotiations in August 2023, kicking off a nearly year-long negotiation period that ended earlier this month.
The final price gives drugmakers, who have strongly opposed the policy, an idea of how much revenue they might lose in the coming years. It also sets a precedent for additional rounds of Medicare drug price negotiations, which will Launch in 2025 and beyond.
In a statement Thursday, President Joe Biden called the new negotiated prices a “historic milestone” made possible because of the Inflation Reduction Act. He specifically praised Vice President Kamala Harris for her overwhelming Senate vote for the law in 2022.
Democratic presidential candidate Harris said in a statement that she was proud to cast the decisive vote, adding that there was more work to be done to lower Americans’ health care costs.
“Today’s announcement will change the lives of many of our loved ones across the country, and we won’t stop here,” Harris said in a statement Thursday, noting that more prescription drugs would be selected in future rounds of negotiations.
Here are 10 drugs for preliminary negotiations:
- Eliquis, by Bristol-Myers Squibbused to prevent blood clotting to reduce the risk of stroke.
- Jardiance, produced by Boehringer Ingelheim Eli Lilly and Companyused to lower blood sugar in patients with type 2 diabetes.
- Please Rito, by Johnson & Johnsonused to prevent blood clotting and reduce the risk of stroke.
- Januvia, by Merckused to lower blood sugar in patients with type 2 diabetes.
- Farsiga, by AstraZenecaused to treat type 2 diabetes, heart failure and chronic kidney disease.
- Entresto, by Novartisused to treat certain types of heart failure.
- Embrel, by Amgenused to treat autoimmune diseases such as rheumatoid arthritis.
- Iruwika, by AbbVie and J&J to treat different types of blood cancers.
- Stelara is made by Janssen and is used to treat autoimmune diseases such as Crohn’s disease.
- Fiasp and NovoLog, insulin by Novo Nordisk.
The Biden administration will release each drug’s so-called maximum fair price, which is the highest price a Medicare Part D plan sponsor or beneficiary can pay for the treatment. Medicare Part D plans are administered by private insurance companies and cover prescription drugs filled at retail pharmacies by older Americans.
The lengthy negotiation process involved months of back-and-forth on price quotes between the companies and Medicare, which set preliminary prices for each drug based on sales data, federal financial support for drug development and data on pending or approved patent applications and exclusivities. Quotation, among other information.
It is difficult to compare a drug’s newly negotiated price with its current list price, which is the price that wholesalers, distributors or other direct buyers pay the manufacturer for the drug before any discounts.
That’s because most of these 10 drugs have received deep discounts after private negotiations with Medicare Part D plans. But Leigh Purvis, director of prescription drug policy at the AARP Public Policy Institute, said the deeply discounted net price Part D plans would pay for a drug is unclear because those negotiations are confidential.
The American Association of Retired Persons (AARP), an influential lobbying group representing people over 50, has advocated for giving Medicare new negotiating powers.
“So I think what people are going to want to know is – are these negotiated prices lower than the net price that Medicare Part D is already paying?” Purvis told CNBC. “That’s the comparison people are looking for. Now, recognizing that rebates are confidential, that’s going to be a tough ask.”
A senior administration official confirmed that the direct comparison between the negotiated price and the net price paid by Medicare was “commercially confidential information.”
“Each Medicare Part D plan has its own individual rebate agreement, and Medicare is not allowed to share any information we have there,” the official told reporters.
The negotiations are at the center of the Biden administration’s efforts to rein in rising drug costs in the United States.
The price negotiations are expected to result in cost savings for people on Medicare, who take an average of four to five prescription drugs each month.
A senior government official told reporters last year that nearly 10% of Medicare enrollees age 65 and older and 20% of those under 65 said they faced difficulties purchasing medications.
President Joe Biden signs the Inflation Reduction Act of 2022 at the White House on August 16, 2022.
Mandel and | AFP | Getty Images
But the pharmaceutical industry sees this process as a threat to its revenue growth, profits and drug innovation. Last year, multiple drugmakers and trade groups filed lawsuits seeking to derail negotiations and declare it unconstitutional.
A lawsuit filed by Merck and Novartis over price negotiations is awaiting a district court decision. The claims in each case overlap with lawsuits filed by Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb and Johnson & Johnson that have been dismissed in recent months.
These 10 drugs are among the top 50 drugs with the highest Medicare Part D spending.
According to CMS, these 10 drugs accounted for $50.5 billion, or about 20%, of total Part D prescription drug costs from June 1, 2022, to May 31, 2023. In 2022, 9 million seniors will spend US$3.4 billion According to the Biden administration, some people are paying more than $6,000 a year for just one of the 10 drugs on the list, all out of pocket.
The drugs have been on the market without generic competitors for at least seven years, and in the case of biologics such as vaccines, 11 years.
According to statistics, Medicare covers approximately 66 million people in the United States, with 50.5 million patients enrolled in Part D plans 2023 data From the health policy research organization KFF.
What happens next?
CMS has until next March to publish an explanation of each drug’s negotiated price. These new prices will take effect on January 1, 2026.
go through February 2025The Biden administration will also announce up to 15 drugs that will undergo the next round of price negotiations, with agreed-upon prices set to take effect in 2027.
After the second round, CMS can negotiate prices for an additional 15 drugs that will take effect in 2028.
“Sometimes I think people get caught up in the fact that their medication isn’t on the list, but if they’re taking a medication that’s causing high costs, then at some point in the future, it’s going to be on the list,” Purvis said. “.
CMS will select only Medicare Part D drugs as those covered by the first two years of negotiations. By 2028, it will add more specialty drugs covered by Medicare Part B, which are typically administered by doctors.
It’s worth noting that Harris may try to expand the scope of negotiations if elected president, experts told CNBC.
Purvis stressed that Medicare “will only get better in the process as we move forward.”
“We do expect that as the negotiation program kicks off and Medicare makes better progress in the drug negotiation process, taxpayers will start to save billions of dollars,” she told CNBC.
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