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The Biden administration on Tuesday unveiled the first 10 prescription drugs that will be the subject of price negotiations between manufacturers and Medicare, starting a controversial process aimed at making expensive drugs more affordable for older Americans.
President Joe Biden's Inflation Reduction Act, passed in a party vote last year, gave Medicare the power to coordinate drug prices directly with manufacturers for the first time in the federal program's nearly 60-year history. The agreed prices for the first round of drugs are planned should come into effect in 2026.
Here are the 10 drugs that are the subject of initial discussions this year:
- Eliquis, manufactured by Bristol Myers Squibbused to prevent blood from clotting to reduce the risk of stroke.
- Jardiance, manufactured by Boehringer Ingelheim, is used to lower blood sugar in people with type 2 diabetes.
- Xarelto, manufactured by Johnson&Johnsonused to prevent blood from clotting to reduce the risk of stroke.
- Januvia, manufactured by Merckused to lower blood sugar in people with type 2 diabetes.
- Farxiga, manufactured by AstraZenecaused to treat type 2 diabetes.
- Entresto, manufactured by Novartisused to treat certain types of heart failure.
- Enbrel, manufactured by amgenused to treat rheumatoid arthritis.
- Imbruvica, manufactured by AbbVieused to treat various types of blood cancer.
- Stelara by Janssen is used to treat Crohn's disease.
- Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill, insulins manufactured by Novo Nordisk.
The Medicare negotiations are at the heart of the Biden administration's efforts to curb rising drug costs in the United States. Some Congressional Democrats and consumer advocates have long pushed for the change, as many seniors across the country are struggling to afford the care.
But the pharmaceutical industry sees the process as a threat to its sales growth, profits and drug innovation. drug manufacturers like Merck And Johnson&Johnson and her supporters want to derail the negotiations and have filed at least eight lawsuits in recent months to have them declared unconstitutional.
The drugs listed Tuesday are among the top 50 highest-spending Medicare Part D, which covers prescription drugs seniors dispense at retail pharmacies. This is based on Data from June 1, 2022 to May 31, 2023, according to the Centers for Medicare and Medicaid Services (CMS).
The drugs have been on the market without generic competitors for at least seven years, and for biological products such as vaccines even eleven years.
Medicare covers around 66 million people in the United States 50.5 million Patients are currently enrolled in Part D plans, according to health research organization KFF.
What happens next
Drug makers must sign agreements by October 1 to participate in the negotiations. CMS will then provide manufacturers with an initial price offer in February 2024, and those companies will have one month to accept or make a counter-offer.
The negotiations will end in August 2024, the agreed prices will be published on September 1, 2024. The reduced prices will not come into effect until January 2026.
If a drugmaker refuses to negotiate, it must either pay an excise tax of up to 95% on U.S. sales of its drugs or withdraw all of its products from the Medicare and Medicaid markets.
The pharmaceutical industry argues that the penalty could be just as high up to 1,900% the daily turnover of a medicinal product.
After the first round of discussions, CMS is able to negotiate prices for an additional 15 drugs for 2027 and another 15 in 2028. From 2029 and beyond, the number will rise to 20 negotiated drugs per year.
“I think it's incredibly important to remember that the negotiation process is cumulative,” said Leigh Purvis, director of prescription drug policy at the AARP Public Policy Institute. “By 2029 we could have negotiated up to 60 drugs.”
CMS will only select Medicare Part D drugs for those drugs covered in the first two years of the trial. In 2028, more specialty drugs will be added that fall under Medicare Part B and are typically administered by physicians.
Drug price talks are expected to save Medicare on an estimated basis $98.5 billion Over a decade, according to the Congressional Budget Office.
Legal challenges for drug manufacturers
Merck, Johnson&Johnson, Bristol Myers Squibb and Astellas Pharma are among the companies seeking to halt the negotiation process. The industry's largest lobby group, PhRMA, and the US Chamber of Commerce have both filed their own lawsuits.
The lawsuits make similar and overlapping allegations that Medicare negotiations are unconstitutional.
The companies argue that the talks would force drugmakers to sell their drugs at huge discounts below market prices. They claim this violates the Fifth Amendment, which requires the government to provide fair compensation for private property put to public use.
The lawsuits also argue that the lawsuit violates drugmakers' First Amendment right to free speech and essentially forces the companies to agree to let Medicare negotiate a fair price.
They also claim that the talks violate the Eighth Amendment by imposing an excessive fine if drugmakers refuse to participate in the process.
The lawsuits are scattered in federal courts across the United States. According to legal experts, the pharmaceutical industry is hoping for conflicting rulings from federal appeals courts that could more quickly escalate the matter to the Supreme Court.
Some drugmakers have confirmed their intention to take their litigation to the country's highest court.
“Looking forward, we will be taking the matter fully, which means taking it to the District Court and, if necessary, the District Court and eventually the Supreme Court,” said Robert Davis, CEO of Merck. during the proceedings a profit announcement earlier this month. “So that's really the strategy.”
Meanwhile, the Biden administration has vowed to fight the legal challenges.
Biden and his top health officials have taken the lawsuits as evidence they are making progress in the fight to bring down drug prices.
“The drug companies don't want that to happen, so they are suing us to prevent us from negotiating lower prices so they can increase their profits,” the president said in a speech at the White House Last month. “But we'll get through this. We will continue to defy Big Pharma.”
