The announcement of the first 10 drugs selected for Medicare price negotiation on September 1st marks a significant step towards government regulation of drug costs. This process, which has faced legal challenges, will initiate negotiations with the manufacturers of these drugs, who will have one month to agree to engage in the negotiation process. Companies that refuse to negotiate risk losing their profitable relationships with Medicare or facing heavy excise taxes.
Steve Knievel, an advocate for access to medicines, remains skeptical of companies that choose not to participate in the negotiations, despite their objections. The law imposes substantial penalties on these companies, and Knievel believes they should continue to move forward despite their legal challenges.
Although they may resist initially, Knievel argues that drug companies have already made significant profits from the first 10 drugs chosen for negotiations. These profits have predominantly come from United States consumers, including those on Medicare.
It is important to note that certain drugs covered by Medicare are exempt from negotiations, such as those with generic or biosimilar versions available, medicines less than seven years old, biological products less than eleven years old, and orphan drugs used to treat rare diseases.
While the specific drugs for negotiation have not been announced, a study published in March identified 10 potential candidates based on their spending under Medicare Part B and Part D in 2020. The selection process prioritizes drugs with the highest total spending.
Interestingly, some of the medications projected to be included in the negotiations come from companies that have sued to stop the process. These include Eliquis, Xarelto, and Januvia, which alone accounted for $18.5 billion in gross Medicare Part D spending in 2020. Other drugs expected to be on the list are Jardiance, Ibrance, and Symbicort.
According to analysis released earlier this year, the top 10 prescription drugs covered under Medicare Part D in 2021 accounted for more than a fifth of gross spending, despite representing less than one percent of all covered medications.
Bailey Reavis, a federal relations associate at Families USA, highlighted that many of the drugs likely to be negotiated are for chronic conditions and cost Medicare several thousands of dollars per beneficiary. The negotiation program, although not effective until 2026, offers hope for lower prices and savings for Medicare.
Tricia Neuman, Executive Director for KFF’s program on Medicare policy, emphasized that while the impact of negotiations won’t be experienced by consumers for a few more years, the start of the price control program shows Medicare’s commitment to addressing concerns about high drug costs. It also signifies Medicare’s entry into new territory, as it now has the authority to negotiate prices, which was previously disallowed.
In conclusion, the announcement of the first 10 drugs for Medicare price negotiation sets the stage for government action to regulate drug costs and benefit patients. The negotiation process, although facing challenges, presents an opportunity for drug companies to contribute to more affordable healthcare. Medicare’s entry into this new territory marks a significant shift towards addressing concerns about high drug costs.
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