Medicare’s First Ten Drugs Targeted For Price Cuts
Millions of Medicare beneficiaries will have lower out-of-pocket costs for medication now that the nation’s single largest health program has the power to negotiate prescription drug prices directly with drug manufacturers.
Medicare recipients who took the first 10 drugs selected for negotiations paid a total of $3.4 billion in out-of-pocket costs for the medication in 2022, while Medicare paid about $50 billion in total, according to the Centers for Medicare & Medicaid Services (CMS).
The medications up for negotiation include “blockbuster” drugs, which are popular drugs that generate $1 billion or more for the drug companies that sell them. Sen. Amy Klobuchar, D-Minn., said reducing the costs of these drugs would make a difference to older adults and other people who take the medication.
“When you have the biggest leverage with the biggest drug-buying group in the country—seniors, 50 million of them—get better prices, it affects the whole ecosystem and the marketplace,” Klobuchar said in an interview with NPR’s Morning Edition.
The Inflation Reduction Act, passed in 2022, gave Medicare the authority to negotiate drug prices for the first time in history. The landmark legislation also, among other things, requires drug companies to pay rebates if drug prices rise faster than inflation.
The following are the list of 10 drugs under Medicare Part D that have been selected for the first cycle of negotiations and the companies that have agreed to participate in the negotiation program:
- Eliquis—a blood thinner that prevents and treats blood clots; manufactured by Bristol Myers Squibb.
- Enbrel—treats rheumatoid arthritis, psoriasis; and psoriatic arthritis, and moderate to severe plaque psoriasis; manufactured by Immunex Corporation.
- Farxiga—treats diabetes; manufactured by AstraZeneca AB.
- Fiasp and NovoLog—insulin used to treat diabetes; manufactured by Novo Nordisk Inc.
- Imbruvica—treats blood cancers; manufactured by Pharmacyclics LLC.
- Januvia—treats diabetes; manufactured by Merck Sharp Dohme.
- Jardiance—treats diabetes; manufactured by Boehringer Ingelheim.
- Stelara—treats plaque psoriasis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis; manufactured by Janssen Biotech, Inc.
- Xarelto—a blood thinner that prevents and treats blood clots; manufactured by Janssen Pharmaceuticals.
According to the U.S. Department of Health and Human Services (HHS), which oversees CMS, the negotiation process will consider:
- The drug’s clinical benefit
- The extent to which the drug fulfills an unmet medical need
- The drug’s impact on people who rely on Medicare
- Other considerations, such as costs associated with research and development, and costs associated with production and distribution
“We are pleased that all 10 drug companies will participate in Medicare drug price negotiations,” HHS Secretary Xavier Becerra said in a press release. “We look forward to continuing this critical work to lower health care costs for the American people and ensure seniors don’t have to choose between paying for prescription drugs or putting food on the table.”
The negotiations will take place during the rest of 2023 and 2024. CMS will publish the agreed-upon negotiated prices by September 1, 2024. The prices will become effective starting January 1, 2026.
Drugmakers and Lobby Groups File Lawsuits
While Medicare is pleased that drug companies are willing to participate in the negotiations, some of the drug manufacturers are against the plan. In fact, several drug manufacturers and the lobby group Pharmaceutical Research and Manufacturers of American (PhRMA) and the National Infusion Center Association have filed lawsuits against the federal government in an attempt to stop Medicare’s ability to negotiate drug prices.
The lawsuits maintain that the negotiation program is unconstitutional because it allows the government to force drugmakers to accept unfairly low prices, among other things. PhRMA, which represents many of the largest pharmaceutical companies in the world, including Merck and Bristol Myers Squibb, contends in its complaint that the “unrestrained authority” Congress gave to HHS conflicts with the United States’ separation-of-power principle.
“Congress took a series of unconstitutional shortcuts, giving the executive branch the open ended task of replacing market based prices in Medicare with an entirely new set of prices at the (Medicare) agency’s own choosing,” James Stansel, PhRMA’s general counsel said at a press conference.
In a statement responding to the negotiation announcement, PhRMA’s CEO Stephen Ubl said the program is the “result of a rushed process focused on short-term political gain rather than what is best for patients.”
Drug manufacturers said they already provide rebates and discounts on many of their drugs. For instance, Bristol Myers Squibb said in a statement that Medicare recipients who are prescribed Eliquis are currently able to get the medication “with a relatively low out-of-pocket cost at an average of $55 per month. This reality is at risk, as the government has not required that insurance companies make selected medicines available in the future without burdensome cost sharing or hurdles to access.”
In addition, the government said Eliquis cost Medicare $16.4 billion in the year ending May 2023. But Bristol Myers Squibb said in a statement that the government’s figures “was more than three times the actual program spending because it doesn’t include rebates, discounts, and fees paid to Medicare and Part D plans.”
In September, a federal judge rejected a request by the U.S. Chamber of Commerce to block Medicare from negotiating drug prices. U.S. District Judge Michael Newman in Dayton, Ohio, wrote, in part, that pharmaceutical companies are not being forced to give anything up because participating in Medicare is “completely voluntary.”
“As there is no constitutional right (or requirement) to engage in business with the government, the consequences of that participation cannot be considered a constitutional violation,” he wrote.
White House spokesperson Karine Jean-Pierre said that the Biden administration “will continue fighting to lower health care costs for American families, no matter how many challenges Republicans and Big Pharma put in our way.”
Ameet Sarpatwari, an assistant professor at Harvard Medical School, told NPR’s Morning Edition: “This is going to be a heavyweight battle.”