Medicare releases prices for top 10 drugs subject to negotiations

The Biden administration on Thursday will release prices for the top 10 prescription drugs that have been the subject of historic negotiations between drugmakers and Medicare, a milestone in a contentious process aimed at making expensive medications more affordable for older Americans.

The government estimates that the new negotiated drug prices will lead to about $6 billion in net savings for the Medicare program in 2026 alone, when they officially take effect. That’s based on the estimated savings the prices would have produced. if they were in effect in 2023, senior administration officials told reporters Wednesday.

The Biden administration also projects that the new prices will save Medicare enrollees $1.5 billion in out-of-pocket costs in 2026 alone.

“For so many people, being able to afford these medications will mean the difference between a debilitating disease and a full life,” Chiquita Brooks-LaSure, administrator of the Centers for Medicare and Medicaid Services, told reporters. “These negotiated prices. They’re not just about cost. They’re about helping ensure that your father, your grandfather, or you can live longer and healthier.”

The move comes a day before the two-year anniversary of President Joe Biden’s Inflation Reduction Act, which gave Medicare the power to negotiate drug prices directly with manufacturers for the first time in the federal program’s nearly 60-year history.

The administration submitted the first batch of drugs selected for pricing negotiations in August 2023, kicking off a nearly year-long negotiation period that concluded earlier this month.

The final prices give drugmakers, who fiercely oppose the policy, an idea of ​​how much revenue they could expect to lose in the coming years. It also sets a precedent for additional rounds of Medicare drug price negotiations, set to begin in 2025 and beyond.

In a statement Thursday, President Joe Biden called the new negotiated prices a “historic milestone” made possible by the Inflation Reduction Act. He specifically praised Vice President Kamala Harris’ tie-breaking vote for the bill in the Senate in 2022.

Harris, the Democratic presidential candidate, said in a statement that she was proud to have cast that decisive vote, adding that there is still much work to be done to reduce health care costs for Americans.

“Today’s announcement will change the lives of many of our loved ones across the country, and we won’t stop there,” Harris said in a statement Thursday, noting that more prescription drugs will be selected for future rounds of negotiations.

Here are the 10 drugs that were the subject of initial discussions:

• Eliquis, produced by Bristol Myers SquibbIt is used to prevent blood clots and reduce the risk of stroke.
• Jardiance, produced by Boehringer Ingelheim and Eli LillyIt is used to lower blood sugar levels in people with type 2 diabetes.
• Xarelto, produced by Johnson & JohnsonIt is used to prevent blood clots, reducing the risk of stroke.
• Januvia, made by GoodsIt is used to lower blood sugar levels in people with type 2 diabetes.
• Farxiga, produced by AstraZenecaIt is used to treat type 2 diabetes, heart failure, and chronic kidney disease.
• Entrance, made by New businessIt is used to treat some types of heart failure.
• Enbrel, produced by AmgenIt is used to treat autoimmune diseases such as rheumatoid arthritis.
• Imbruvica, made by AbbVie and J&J, is used to treat several types of blood cancers.
• Stelara, manufactured by Janssen, is used to treat autoimmune diseases such as Crohn’s disease.
• Fiasp and NovoLog, insulins produced by New Nordisk.

The Biden administration will publish the so-called fair price ceiling for each drug, the highest price a Medicare Part D plan sponsor or beneficiary can pay for the treatment. Medicare Part D plans, which are administered by private insurers, cover prescription drugs that older Americans fill at retail pharmacies.

The lengthy negotiation process involved months of back and forth between the companies and Medicare, which determined its initial bid for each drug using, among other information, sales volume data, federal financial support for the drug’s development, and data on pending or approved patent applications and exclusivities.

It is difficult to compare a drug’s new negotiated price with its current list price, which is what a wholesaler, distributor, or other direct purchaser paid the manufacturer for a drug before any discounts.

That’s because most of the 10 drugs are already subject to significant discounts after private negotiations with Medicare Part D plans. But the deeply discounted net price that Part D plans pay for any given drug is unknown because those negotiations are confidential, according to Leigh Purvis, a prescription drug policy officer at the AARP Public Policy Institute.

AARP, the influential advocacy group representing people over 50, has championed Medicare’s new negotiating powers.

“So I think that’s what people are going to be trying to get at: Are these negotiated prices lower than the net prices that Medicare Part D was already paying?” Purvis told Vscek. “And so that’s the comparison that people are looking for. Now, recognizing that the reimbursements are ring-fenced, that’s going to be a tough ask.”

A senior administration official confirmed that a direct comparison between negotiated prices and net prices paid by Medicare is “commercially sensitive information.”

“Each Medicare Part D plan has its own individual reimbursement agreements, and Medicare is prohibited from sharing the information we have,” the official told reporters.

The negotiations are the centerpiece of the Biden administration’s efforts to curb rising drug costs in the United States. Some congressional Democrats and consumer groups have long pushed for the change, as many seniors across the country struggle to afford treatment.

The price negotiations are expected to save money for Medicare enrollees, who take an average of four to five prescription drugs a month.

A senior administration official told reporters last year that nearly 10 percent of Medicare enrollees age 65 and older and 20 percent of those younger than 65 have trouble affording their medications.

But the pharmaceutical industry sees the process as a threat to its revenue growth, profits and drug innovation. Several drugmakers and trade groups filed lawsuits last year seeking to derail the negotiations and declare them unconstitutional.

The lawsuits filed by Merck and Novartis challenging the price talks are awaiting decisions in district courts. Each case presents claims that overlap with lawsuits filed by Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb and J&J that were dismissed in recent months.

The 10 drugs are among the 50 most expensive drugs for Medicare Part D.

The 10 drugs accounted for $50.5 billion, or about 20%, of total Part D prescription drug costs from June 1, 2022, to May 31, 2023, according to CMS. In 2022, 9 million seniors spent $3.4 billion out of pocket on the 10 drugs, and some paid more than $6,000 a year for just one of the drugs on the list, according to the Biden administration.

The drugs have been on the market for at least seven years without generic competitors, or 11 years in the case of biological products such as vaccines.

According to 2023 data from health policy research organization KFF, Medicare covers about 66 million people in the United States, and 50.5 million patients are enrolled in Part D plans.

CMS has until March of next year to publish an explanation of the negotiated prices for each drug. These new prices will go into effect on January 1, 2026.

By February 2025, the Biden administration will also unveil 15 more drugs that will be subject to the next round of pricing talks, with agreed-upon prices taking effect in 2027. Drugmakers will have until the end of that month to decide whether to participate in the program.

After this second round, CMS will be able to negotiate prices for 15 more drugs that will go into effect in 2028. That number will increase to 20 negotiated drugs per year starting in 2029.

“Sometimes I think people get caught up in the fact that their drug is not on the list, but will be on it in the future if they are taking a drug that carries a high cost,” Purvis said.

CMS will select only Medicare Part D drugs for covered medications in the first two years of negotiations. It will add more specialized drugs covered by Medicare Part B, which are typically administered by physicians, in 2028.

In particular, experts told Vscek, Harris would likely seek to broaden the scope of negotiations if elected president.

Purvis stressed that Medicare “will only improve this process as we move forward.”

“We expect billions of dollars in taxpayer savings to start coming in as this negotiation program takes off and as Medicare gets better at its drug negotiation process,” he told Vscek.