In an unprecedented move in the protracted political battle over the nation’s exorbitant drug prices, the Biden administration on Tuesday named 10 expensive prescription drugs that will be discussed in price negotiations with drug companies. The government wants to reduce the financial burden on older and disabled Americans.
Medications used to treat diabetes and prevent blood clots make up half of the first drugs chosen for price negotiations, according to a list made public by federal health officials in charge of Medicare, the vast public health insurance program. Millions of people on Medicare took these drugs in the previous year. Others are employed to treat cancer, autoimmune disease, and heart problems. Since the lower, negotiated pricing won’t be accessible until the beginning of 2026, consumers won’t experience benefits right away.
Eliquis, a blood thinner, Jardiance, a medication for diabetes and heart failure, and Xarelto, another blood thinner, are the top three drugs on the highly anticipated list, which features ten different medications. In the previous year, they cost Medicare $16 billion, $7 billion, and $6 billion, respectively.
Medications that are covered by Medicare medication coverage, lack specific competition to drive down their pricing, and have been on the market for at least a few years to give drugmakers time to help recoup the cost of producing them may be targeted for price negotiation.
Although the number of medications and the timing of the first price reductions — 2026 — are less ambitious than some Democrats had sought for many years, Tuesday’s move toward lowering Medicare drug prices was a significant component of last year’s Inflation Reduction Act, a law that President Biden and his aides hail as a policy victory. Additionally, six pharmaceutical companies, the Chamber of Commerce, and the primary trade association for the pharmaceutical sector have filed separate lawsuits around the nation in an effort to thwart the bargaining plan as a whole.
However, this initial list of 10 medications was hailed by the Biden administration, Democratic allies in Congress, and consumer health activists as a significant step toward improving the financial security of the Medicare system and relieving the load on its beneficiaries. Medicare is a federal insurance program that is available to those who are at least 65 years old as well as to younger folks with impairments. The Congressional Budget Office estimated that the discussions would save the program little more than $100 billion over the course of the ensuing decade when the law passed last year.
In a statement released by the White House, Biden expressed his plan to utilize the issue as a focal point of his reelection campaign. “There is no reason why Americans should be forced to pay more than any developed nation for life-saving prescriptions just to pad Big Pharma’s pockets,” Biden said.
According to a survey last summer by KFF, a health care reform organization, more than 60% of the 65 million Medicare beneficiaries use prescription medication, and 25% take four or more.
The remaining medications on the list include Januvia, Farxiga, and NovoLog, which treat various disorders including diabetes; Enbrel and Stelara, which treat psoriasis and arthritis; Entresto, which treats heart failure; and Imbruvica, which treats blood malignancies.
Wall Street analysts anticipated that the majority of the 10 pharmaceuticals chosen for price talks would be included on the list, among other things based on Medicare spending and their sales in the United States. Medicare-eligible seniors’ average yearly out-of-pocket expenses, including those with financial aid, ranged from $121 for the diabetes medicine NovoLog to $5,247 for the cancer treatment Imbruvica. Overall, the HHS predicts that almost 9 million seniors enrolled in Medicare’s prescription drug program will take one or more of the 10 medications in 2022 and will incur out-of-pocket costs totaling $3.4 billion.
The 10 medications named on Tuesday are the initial group of medications whose prices will be negotiated, with the list growing in coming years. Manufacturers must agree to pricing negotiations with the Centers for Medicare and Medicaid Services for this initial batch by the beginning of October. If they do, the businesses will soon be required to provide CMS with a wide range of information including income and manufacturing costs for each drug that was chosen.
If a manufacturer rejects negotiations or won’t accept what federal regulations refer to as a “maximum fair price,” the company will be subject to a sizable penalty or be forced to leave Medicare and Medicaid, the country’s largest public health insurance program for those with low incomes.
A drug must not be in competition with a less priced generic version to be eligible for the price negotiation process. Likewise, a biologic, which is a class of drugs created from live organisms, must not be in competition with any biosimilars, which are less expensive versions. Over the next two years, there will be a minor increase in the number of medications used, with a total of 15 drugs over each of the next two years and 20 drugs over the following two years. The medications are covered under Medicare Part D, the program’s drug insurance, which was established twenty years ago. Following that, the medications may come from Part D or from Part B, such as cancer treatments, which are given by medical professionals.
Under the condition of anonymity, senior health administration officials briefed reporters early on Tuesday before the president’s speech and stated that Part D coverage for approximately 7,500 prescription pharmaceuticals was the starting point for CMS. Then, they reduced the list of potential treatments to 50, including medicines and biologics that were approved by the Food and Drug Administration at least seven years ago and that result in the highest costs to Medicare. Other criteria were also applied. From there, CMS ranked the 50, selecting the top 10 that would cost the program the most money.
Despite its limitations, the introduction of Medicare prescription price negotiation represents a significant departure from Medicare’s past. When the program was established in the 1960s, Part B, which covered prescriptions provided in a doctor’s office, did not cover self-medication by patients. Despite decades of attempts, outpatient drug benefits remained a part of bigger, unsuccessful health reform ideas. It wasn’t until a series of Medicare reforms approved by Congress in 2003 that expanded drug benefits were included in the program. That law’s Republican-friendly phrasing forbade the government from participating in negotiations over drug prices. The ban was lifted by the 2022 Inflation Reduction Act, or IRA.
