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HHS lists first 10 drugs subject to Medicare price negotiation

List includes drugs for diabetes, blood clots, heart failure, rheumatoid arthritis and blood cancer

The Biden administration on Tuesday released the first 10 drugs eligible for Medicare price negotiation.
The Biden administration on Tuesday released the first 10 drugs eligible for Medicare price negotiation. (George Frey/AFP via Getty Images file photo)

The Biden administration on Tuesday unveiled the 10 prescription drugs that will be eligible for price negotiation — a major step forward in the implementation of legislation that passed last year aimed at lowering drug prices. 

The list includes some of the most expensive brand-name drugs on the market like Eliquis, a drug manufactured by Bristol-Myers Squibb Co. that prevents and treats blood clots and costs Medicare billions of dollars a year.

The program is a major priority for President Joe Biden, who ran for president in 2020 in part on the promise to allow Medicare to negotiate drug prices. New prices take effect Jan. 1, 2026.

“Today is the start of a new deal for patients where Big Pharma doesn’t just get a blank check at your expense and the expense of the American people,” Biden said Tuesday at the White House. “Health care should be a right, not a privilege, in this country.” 

Other drugs on the list include Jardiance, a diabetes drug manufactured by Eli Lilly and Boehringer Ingelheim, and Xarelto, a drug from Janssen Pharmaceuticals that prevents blood clots. 

In total, the 10 drugs accounted for 20 percent of Part D spending between June 1, 2022, and May 31, 2023, amounting to about $50.5 billion, according to the Department of Health and Human Services. The other drugs selected treat heart failure, rheumatoid arthritis, blood cancer and diabetes manufactured by companies like Merck & Co. Inc., AstraZeneca PLC, Novartis AG, Amgen Inc. and AbbVie Inc. 

The other drugs are Januvia, Farxiga and Fiasp products, used to treat diabetes; Entresto, used to treat heart failure; Enbrel and Stelara, which treat psoriasis; and Imbruvica, which treats blood cancers. 

CMS will submit initial offers to the drug companies Feb. 1. Manufacturers will then have one month to accept the offer or propose a counteroffer. 

The negotiation period ends Aug. 1, 2024, and negotiated prices will be announced by CMS on Sept. 1, 2024. 

The announcement of the 10 drugs comes even as the industry continues to fight the implementation of the law, with several drug companies and the U.S. Chamber of Commerce suing the Biden administration in separate cases.

PhRMA, Merck & Co. Inc., Johnson & Johnson, Bristol Myers Squibb Co, Astellas Pharma Inc. and other companies have all filed lawsuits, with PhRMA writing in a blog post last week that the law “empowers the government to make unilateral and arbitrary decisions about what innovation is valued and what is not, which could lead to less investment in treatments aimed at addressing seniors’ greatest needs.”

“Giving a single government agency the power to arbitrarily set the price of medicines with little accountability, oversight or input from patients and their doctors will have significant negative consequences long after this administration is gone,” PhRMA president and CEO Stephen J. Ubl said in a statement Tuesday. 

Supporters say that argument is overblown. The law exempted several types of drugs including ones that have a generic or biosimilar available. Drugs must have been on the market for at least seven years, or 11 years for biologics, to be eligible for negotiation.

“We cannot overstate how monumental this law is for older Americans’ financial stability and overall health,” said Nancy LeaMond, executive vice president of AARP.  “For too long, big drug companies have fleeced our country and padded their profits by setting outrageous prices, all at the expense of American lives.” 

Under the law passed last year, CMS will be able to negotiate prices for additional drugs, including those covered by Part B, in future years. 

Lower prices paid by Medicare could also mean lower cost-sharing for patients. In 2022, for patients who didn’t receive subsidies to help pay for drugs, the average annual out-of-pocket spending was highest for Imbruvica at $6,497.

When negotiating the maximum fair price for the 10 drugs, CMS must consider several factors laid out in the law, including evidence related to therapeutic alternatives, the manufacturer’s research and development costs and whether it has recouped those costs; federal financial support for the discovery and development of the drug and other information. 

In all, the program is expected to save the government $98.5 billion through fiscal 2031, according to the Congressional Budget Office.

The CBO has estimated that net prices for selected drugs will decrease by about 50 percent on average while having a small impact on the number of new drugs coming to market.   

A spokesperson for Bristol Myers Squibb Co., which manufactures Eliquis, said the drug was “targeted” for negotiation “due to the sheer number of Medicare patients who benefit from the medicine, not its price” and that beneficiaries can buy it an an average cost of $55 per month.  

About 3.7 million Medicare enrollees take Eliquis, according to CMS, costing the program about $16 billion per year.  

But a senior administration official told reporters Tuesday that program isn’t just about reducing costs for beneficiaries, it is about saving Medicare money.

“Overall the purpose of negotiation is to be able to get the fairest price for Medicare, for the taxpayer and for the people who rely on these life-saving medications,” the official said.

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