Activists protest against the high cost of prescription drugs in front of the U.S. Department of Health and Human Services building in Washington, DC on October 6, 2022.
Anna Moneymaker | Getty Images
The Biden administration will announce prices Thursday for the first 10 prescription drugs that are the subject of landmark negotiations between drug companies and Medicare, a milestone in a controversial process that aims to make costly medicines more affordable for older Americans.
The government estimates that the drug’s new negotiated price will save the Medicare program about $6 billion in net savings in 2026 alone. officially come into effectThis is based on the estimated savings that the price would bring. Senior administration officials told reporters on Wednesday that if these bills were to take effect in 2023, they would become law.
The Biden administration also expects the new pricing will save Medicare enrollees $1.5 billion in out-of-pocket costs in 2026 alone.
“For many people, being able to afford these drugs means the difference between a debilitating illness and living a fulfilling life,” Centers for Medicare and Medicaid Services Secretary Chiquita Brooks LaSure told reporters. “These negotiated prices aren’t just about cost — they’re about ensuring your father, grandfather or you can live a longer, healthier life.”
The announcement came a day before the second anniversary of President Joe Biden’s signing of the Stop Inflation Act, which gave Medicare the authority to negotiate drug prices directly with drug manufacturers for the first time in the federal program’s nearly 60-year history.
The administration announced the first set of drugs selected for price negotiations in August 2023, kicking off a nearly year-long negotiation period that ended earlier this month.
The final price offers a glimpse into how much revenue could be lost in coming years for drug companies, which fiercely oppose the policy, and sets a precedent for additional rounds of Medicare drug price negotiations. Starting in 2025 And more.
President Joe Biden said in a statement Thursday that the new negotiated rates were a “historic milestone” made possible by the Get Rid of Inflation Act. He particularly praised Vice President Kamala Harris, who voted to pass the legislation through the Senate in 2022.
Democratic presidential candidate Harris said in a statement she was proud to cast the deciding vote, adding that there is still work to be done to lower health care costs for Americans.
“Today’s announcement will be life-changing for so many loved ones across the country, and we don’t intend to stop here,” Harris said in a statement Thursday, noting that additional prescription drugs will be selected in upcoming negotiations.
The 10 drugs initially subject to consultation are:
- Eliquis, Manufacturer Bristol-Myers SquibbIt is used to prevent blood clots and reduce the risk of stroke.
- Boehringer Ingelheim’s Jardiance Eli Lillyis used to lower blood sugar levels in people with type 2 diabetes.
- Xarelto, Manufacturer Johnson & JohnsonIt is used to prevent blood clots and reduce the risk of stroke.
- Januvia, manufacturer Merckis used to lower blood sugar levels in people with type 2 diabetes.
- Farsiga, Manufacturer AstraZenecais used to treat type 2 diabetes, heart failure, and chronic kidney disease.
- Entresto, Manufacturer Novartisis used to treat certain types of heart failure.
- Enbrel, manufacturer AmgenIt is used to treat autoimmune diseases such as rheumatoid arthritis.
- Ibrubic, Manufacturer AbbVie The drug, developed by J&J, is used to treat various types of blood cancers.
- Stelara, manufactured by Janssen, is used to treat autoimmune disorders such as Crohn’s disease.
- Fiasp and NovoLog Novo Nordisk.
The Biden administration will announce what are called maximum fair prices for each drug — the highest price that sponsors or beneficiaries of Medicare Part D plans can pay for the treatment. Medicare Part D plans, run by private insurers, cover prescription drugs that older Americans pick up at retail pharmacies.
The lengthy negotiation process involved months of back-and-forth pricing proposals between drug companies and Medicare, with Medicare determining its initial proposed price for each drug based on a variety of information, including sales data, federal funding for drug development, and data on pending or approved patents and exclusivity.
It is difficult to compare a drug’s new negotiated price with its current list price, which is the price a wholesaler, distributor, or other direct purchaser paid to the manufacturer of the drug before any discounts.
That’s because most of the 10 drugs are already subject to deep discounts in private negotiations with Medicare Part D plans. But because the negotiations are secret, the net discounted prices that Part D plans will pay for specific drugs aren’t known, said Lee Purvis, director of prescription drug policy at the AARP Public Policy Institute.
AARP, an influential lobbying group that represents people over 50, has been pushing for new negotiating powers for Medicare.
“So I think what people want to know is whether the negotiated price is lower than the net price that Medicare Part D was already paying,” Purvis told CNBC. “And that’s the comparison people are asking. It’s going to be a tough question given that the rebates are confidential.”
A senior administration official confirmed that a direct comparison of negotiated prices with the net prices paid by Medicare is “commercially sensitive.”
“Medicare Part D plans each have their own reimbursement contracts, and Medicare is prohibited from sharing any information we have there,” the official told reporters.
The negotiations are a central part of the Biden administration’s efforts to rein in soaring drug prices in the U.S. Some Democratic lawmakers and consumer advocates have long called for the reforms as many seniors across the country struggle to afford health care costs.
The price negotiations are expected to save money for Medicare enrollees, who take an average of four to five prescription drugs a month.
About 10% of Medicare enrollees over 65 and 20% of those under 65 have trouble affording their drugs, a senior administration official told reporters last year.
President Joe Biden signed the Inflation Reduction Act of 2022 at the White House on August 16, 2022.
Mandel Gunn | AFP | Getty Images
But the pharmaceutical industry sees the process as a threat to revenue growth, profits and drug innovation. Several drug companies and industry groups filed a lawsuit last year seeking to block the negotiations and have them declared unconstitutional.
Lawsuits brought by Merck and Novartis over the price fixing are awaiting rulings in district court. Each suits covers claims that overlap with those dismissed in recent months by Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb and Johnson & Johnson.
These 10 drugs are among the top 50 drugs with the highest Medicare Part D expenditures.
According to CMS, 10 drugs accounted for $50.5 billion, or about 20%, of total Part D prescription drug spending from June 1, 2022 to May 31, 2023. In 2022, 9 million seniors will be covered by the plan. $3.4 billion The Biden administration said many doctors are paying out-of-pocket for the 10 drugs, with some paying more than $6,000 a year for just one of the drugs on the list.
These medicines have been on the market for at least seven years without generic competition, or 11 years in the case of biological products such as vaccines.
Medicare covers approximately 66 million people in the United States, with 50.5 million patients enrolled in Part D plans. 2023 Data From KFF, a health policy research organization.
What happens next?
CMS has until next March to release a description of the negotiated prices for each drug. The new prices will go into effect on Jan. 1, 2026.
by February 2025The Biden administration is also expected to announce up to 15 more drugs that will be subject to the next round of price negotiations, with the agreed-upon prices taking effect in 2027. Drugmakers have until the end of the month to decide whether to join the program.
After the second round, CMS can negotiate prices for another 15 drugs, effective in 2028. The number of drugs subject to negotiation will increase to 20 per year after 2029.
“I think some people get hung up on the fact that their medication isn’t on the list, but if you’re taking medications that cost a lot of money, it’s likely that at some point in the future they’ll be on the list,” Purvis said.
For the first two years of negotiations, CMS will select only Medicare Part D drugs for coverage. In 2028, it plans to add more specialized drugs that are typically covered by Medicare Part B, which are administered by physicians.
Experts told CNBC that Ms Harris would likely seek to broaden the scope of negotiations if elected president.
Purvis stressed that Medicare “will get better and better at this process as we move forward.”
“As this negotiation program gets off the ground and Medicare improves in its drug negotiation process, we are hopeful that we will begin to see billions of dollars in savings for taxpayers,” she told CNBC.
