The Biden administration has taken a significant step towards addressing healthcare affordability in the United States by announcing the first 10 drugs chosen for Medicare price negotiation. However, major pharmaceutical companies and industry groups are contesting the entire program in court, which could potentially delay or halt its implementation. Despite this, advocates hope that the discounted prices resulting from the Medicare Drug Price Negotiation Program will have a ripple effect throughout the pharmaceutical industry.
The Centers for Medicare and Medicaid (CMS) selected these drugs by analyzing Medicare Part D drug use from June 2022 to May 2023. The chosen medications represent $50.5 billion, or 20 percent, of gross Medicare Part D-covered prescription drug costs.
Health and Human Services Secretary Xavier Becerra expressed optimism about the progress made towards providing affordable healthcare for all Americans. He stated that the administration is bringing peace of mind to seniors and people with disabilities who rely on Medicare.
Here are five key points to know about this milestone:
1. Negotiations officially begin: The announcement places the responsibility on drug manufacturers to sign an agreement to negotiate by October 1. Although companies can opt-out, doing so would mean severing their relationship with Medicare for all covered medications or facing excise tax penalties.
2. Drugs and manufacturers: The selected drugs, including Eliquis, Xarelto, Jardiance, Januvia, Farxiga, NovoLog, Imbruvica, Enbrel, and Stelara, are commonly used to treat conditions like heart disease, diabetes, blood cancers, and autoimmune diseases. Five of the eleven manufacturers have filed lawsuits against the Health and Human Services (HHS) to halt the negotiation process.
3. State of legal battles: Eight lawsuits challenging CMS’s ability to negotiate drug prices have been filed. These lawsuits allege constitutional violations, with opponents arguing that the program would lead to fewer new drug approvals and hinder future innovations.
4. Predictions mostly accurate: Early projections for drug inclusions were largely accurate due to strict guidelines and available data on Medicare Part D spending. However, some unexpected drugs, such as Stelara and Entresto, were included, despite anticipated generic competition and rising usage.
5. Timeline from here: Lowered prices for the announced medications are set to take effect in 2026. CMS plans to negotiate maximum fair prices for these drugs starting in 2024, with the first offer going out in February. Additionally, 15 more drugs are expected to be named for Medicare price negotiation by 2026.
CMS Administrator Chiquita Brooks-LaSure emphasized her agency’s commitment to making a good faith effort in the upcoming negotiations. The administration hopes that drug companies will come to the table and negotiate to ensure access to innovative treatments and therapies for the American people.
Overall, the Biden administration’s announcement marks a significant development in addressing healthcare affordability, but legal battles and potential delays loom on the horizon.
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