The Centers for Medicare & Medicaid Services announced Tuesday the first 10 drugs to be included in Medicare price negotiations, under the Inflation Reduction Act. This is a crucial step for the Biden Administration’s efforts to reduce the high costs of prescription drugs for seniors.
Medicare provides health insurance coverage to 65 million people in the U.S., according to KFF, a nonpartisan group that studies health policy issues. The program has enormous control over other aspects of health care and dictates how much doctors, hospitals, and medical facilities can be paid. However, it is not allowed to negotiate drug costs.
Medicare will have the opportunity to negotiate directly with drugmakers about the prices of the most expensive medications next year. Negotiated prices will be implemented in 2026.
The drugs that have been selected for negotiation are:
- Eliquis is a blood thinner
- Xarelto is a blood thinner
- Januvia, a diabetes drug
- Jardiance, a diabetes drug
- Enbrel is a drug that treats rheumatoid arthritis
- Imbruvica is a drug that treats blood cancer
- Farxiga is a drug that treats diabetes, chronic kidney disease, and heart failure.
- Entresto, a heart failure drug
- Stelara is a drug that treats psoriasis, Crohn’s and other diseases.
- Fiasp & NovoLog for Diabetes
According to the CMS, Medicare spent $50.5 billion on the 10 drugs between June 1, 2022 and May 31, 2023.
The drugmakers have 30 days to agree to negotiate or face penalties. If a drugmaker decides to remove its drug from Medicare, the tax may be removed. This would however cut off the company from a large share of the market.
Major drug companies such as Merck, Bristol Myers Squibb and Johnson & Johnson have taken legal action against the negotiation provision, claiming that it will reduce research and development spending, resulting in fewer breakthroughs and lifesaving treatments.
In a press release, Stephen Ubl said that the announcement was the result of an accelerated process, which focused more on short-term politics than the best interests of patients. “Politics shouldn’t dictate which treatments and remedies are worth developing, and who should have access to them.”
Some experts emphasize the need to reduce the out-of pocket costs that older people pay at the pharmacy.
Leigh Purvis said, “Definitely, the negotiation process will meet its goal to capture those drugs that either are used by a large number of people or are very expensive, or both,” at a press briefing before Tuesday’s announcement.
The list of Tuesday is just a start.
In 2027, 15 additional drugs will be subject to negotiated prices, followed by 15 more in 2028, and then 20 more each year thereafter.
Negotiation applies to all drugs covered by Medicare Part D, including those that do not have generic alternatives or comparable alternatives. Part D drugs covered by Medicare are those taken at home. Part B drugs will be added in the future and are drugs that are administered to patients in hospitals, like chemotherapy.
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