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Medicare will soon start negotiating the prices of 10 drugs with manufacturers. Shana Novak/Stone RF/Getty Images
The Biden administration has introduced the first batch of 10 prescription drugs that will be subject to price negotiations between Medicare and drug manufacturers. This marks the beginning of a contentious process aimed at making expensive medications more affordable for elderly Americans.
President Joe Biden's Inflation Reduction Act, passed along party lines last year, granted Medicare the unprecedented authority to directly negotiate drug prices with manufacturers. The finalized prices for this initial group of drugs are slated to become effective in 2026.
The following drugs are part of the inaugural negotiation round:
Eliquis (Bristol-Myers Squibb) - Used to prevent blood clotting and reduce stroke risk.
Jardiance (Boehringer Ingelheim) - Used to lower blood sugar for type 2 diabetes patients.
Xarelto (Johnson & Johnson) - Prevents blood clotting to reduce stroke risk.
Januvia (Merck) - Lowers blood sugar for type 2 diabetes patients.
Farxiga (AstraZeneca) - Treats type 2 diabetes.
Entresto (Novartis) - Treats certain types of heart failure.
Enbrel (Amgen) - Treats rheumatoid arthritis.
Imbruvica (AbbVie) - Treats various blood cancers.
Stelara (Janssen) - Treats Crohn’s disease.
Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill (Novo Nordisk) - Insulins.
These negotiations are the cornerstone of the Biden administration's efforts to curb escalating medication costs in the United States. The initiative has garnered support from some Democrats in Congress and consumer advocates, who seek to alleviate the financial burden on seniors.
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However, the pharmaceutical industry views this process as a threat to revenue growth and drug innovation. Major drug manufacturers, including Merck and Johnson & Johnson, have contested these negotiations through lawsuits, asserting that they could undermine their financial viability.
The 10 drugs targeted for negotiation rank among the top 50 highest spending drugs under Medicare Part D, covering prescription medications filled at retail pharmacies. These medicines represented around 20% of the total Part D prescription drug costs from June 2022 to May 2023.
Medicare Part D spent the most on Eliquis at $16.5 billion, followed by $7 billion on Jardiance, $6 billion on Xarelto, and $4 billion on Januvia.
The negotiation process involves manufacturers signing agreements by October 1, 2023. The initial pricing offer will be made by CMS in February 2024, with negotiations concluding by August 2024. The agreed-upon reduced prices will be published on September 1, 2024, and implemented in January 2026.
While this initial negotiation round covers Part D drugs, Medicare Part B drugs, typically administered by doctors, will be included in 2028. The drug price negotiations are expected to yield an estimated $98.5 billion in savings for Medicare over a decade.
Legal challenges from the pharmaceutical industry, including lawsuits from Merck, Johnson & Johnson, and other major players, seek to halt the negotiation process. These lawsuits raise concerns about the constitutionality of the negotiations and their potential impact on drugmakers' revenues. The issue could eventually reach the Supreme Court, as conflicting rulings from federal appellate courts are anticipated.
The Biden administration remains determined to confront these legal challenges, viewing them as evidence of their commitment to reducing drug prices and holding pharmaceutical companies accountable.
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