What’s next for Biden’s Medicare drug price negotiations | Wilnesh News

The Biden administration on Thursday unveiled a federal plan to negotiate new prices for the top 10 drugs with drugmakers, a milestone in Democrats’ decades-long quest to use Medicare to lower prescription drug costs.

But the announcement is just the beginning of a contentious, multi-round process that could save taxpayers and older Americans more money and put more pressure on drug companies over time. It’s a key provision of President Joe Biden’s Inflation Reduction Act, which he signed into law almost two years ago.

this agreed priceThe agreement will enter into force in 2026, setting a precedent for future rounds of negotiations starting next year. The negotiations could affect prices for dozens of more widely used drugs made by the world’s largest drug companies in the coming years.

“I think what people should expect is that this is just the beginning. These are just the top 10 drugs,” said Leigh Purvis, director of prescription drug policy at the AARP Public Policy Institute, an influential lobbying group. Affiliates of the group.

“Sometimes people get caught up in the fact that their medication is not on the list, but if they are taking a medication that is causing high costs, then at some point in the future it will be on the list,” Purvis added.

It’s unclear how much lower the negotiated prices are than the current net prices for the top 10 drugs, which are subject to significant rebates from Medicare Part D plans. These net prices are not made public, so it’s difficult to know how much Medicare and patients will actually save on a drug when price negotiations begin in 2026. Participate in a Part D plan.

“It’s hard to know the starting point because … the numbers are not public,” said Tricia Neuman, executive director of the Medicare Policy Program at KFF, a health policy research group, referring to the net price after rebates.

Still, the Biden administration estimates that the new negotiated drug prices will generate about $6 billion in net savings for Medicare plans and $1.5 billion in out-of-pocket costs for beneficiaries in 2026 alone.

Neumann said the negotiations “seem to be going relatively smoothly – the total savings are considerable.” She added that this would “increase the level of savings over time” as prices for more drugs are finalized in future rounds.

Price negotiations are also likely to put more pressure on drugmakers in the coming years. Many of the drugs in the first round of negotiations are nearing patent expiration, which will expose the market to competition from cheaper generics, which will reduce revenue.

For example, Bristol-Myers SquibbThe blood thinner Eliquis is expected to lose patent exclusivity in the United States starting April 1, 2028.

Leerink Partners analyst David Risinger said in a research note Thursday that future rounds of negotiations may move away from drugs that lose market exclusivity over time.

go through February 2025The Biden administration will select up to 15 more drugs for the next round of price negotiations, with new prices set to take effect in 2027. Manufacturers have until the end of February to decide whether to participate in the program — a no-brainer for companies because if they don’t, they face hefty excise taxes or lose access to Medicare and Medicaid.

“Things are going to start to get more painful as time goes on,” Jeff Jonas, portfolio manager at Gabelli Funds, said in a statement Thursday. For example, he noted that the next round of price negotiations could include Novo NordiskThe best-selling diabetes drug Ozempic.

Jonas added, “There’s been speculation that the government is going easy on pharmaceutical companies this year because it’s an election year and it’s the first time pharmaceutical companies have done that.”

After the second round, the Centers for Medicare and Medicaid Services can negotiate prices for an additional 15 drugs that go into effect in 2028.

CMS will select only Medicare Part D drugs as those covered by the first two years of negotiations. It would add more specialty drugs, which are typically administered by doctors, to this round of Medicare Part B that takes effect in 2028.

This could pose a bigger threat to the pharmaceutical industry because Medicare Part B drugs are not discounted as deeply as those covered by Part D.

“Because the rebates are limited, my hypothesis is that they will see a larger drop than Part D drugs,” Risinger told CNBC, referring to drugs covered by Part B.

Jonas noted that negotiations for price adjustments in 2028 could include some big cancer drugs, such as MerckThe blockbuster chemotherapy drug Keytruda.

Jonas said Vice President Kamala Harris, the Democratic presidential candidate, may try to broaden the scope of negotiations if elected and “maybe be more aggressive in discounting.”

But Neumann said whether she can pass a law to support the policy will depend on which party controls the House and Senate. Harris herself would have had to cast the deciding vote in the Democratic-controlled Senate to pass the original law.

“There’s some interest among Democrats in Congress, but obviously the law will depend on which party is in power,” Neumann said.

The pharmaceutical industry believes the negotiations could cut into their revenue, profits and innovation in the long term.

For example, Steve Ubl, chief executive of PhRMA, the pharmaceutical industry’s largest lobbying group, said in a statement Thursday that price negotiations could lead to fewer treatments for cancer, mental health, rare diseases and other conditions because It “fundamentally changes” the incentives for drug development.

Medicare can begin negotiating prices for small molecule drugs as early as nine years after they are approved by the Food and Drug Administration, compared with 13 years for biologics. Small molecule drugs are made from low molecular weight chemicals, while biologic drugs are derived from biological sources such as animals or humans.

The industry believes this disparity will deter companies from investing in small molecule drugs.

—CNBC’s Angelica Peebles contributed to this report