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The new Medicare power to negotiate drug prices will save the federal government an estimated $6 billion and cut $1.5 billion in out-of-pocket costs for seniors when lower prices take effect by 2026, the Biden administration announced Thursday.
of Negotiation programApproved by 2022 Inflation Reduction ActIt has been a central talking point of the White House's efforts to lower the cost of living for Americans, including prescription drugs, after inflation soared under President Joe Biden. Vice President Kamala Harris is expected to continue her campaign to lower drug prices until the November election.
“It's a relief for the millions of seniors who take these drugs to treat everything from heart attacks, blood clots, diabetes, arthritis, Crohn's disease and more — and it's a relief for American taxpayers,” Biden said in a statement.
Biden and Harris touted the program's results in their first joint appearance in Maryland on Thursday afternoon, after Biden announced he would. Not running for re-election And as Harris was replaced Democratic candidate.
Many Americans — including seniors, a key voting group — are unaware of the law's major provisions to lower drug costs for Medicare enrollees. 48% of voters age 65 and older know that Medicare has the power to negotiate the price of some prescription drugs. KFF poll Released in May.
Medicare has negotiated savings rates of 38 percent to 79 percent by 2023 on the list price of 10 drugs, according to the Department of Health and Human Services. However, those figures don't take into account the rebates and discounts drugmakers already offer to Part D plans, known as net pricing.
The $6 billion in savings for Medicare represents a 22% reduction in the total net cost of the drugs, resulting in rebates and discounts. While various industry experts estimate the amount of price reductions offered by drug manufacturers, officials cannot provide details on net price reductions for each drug because it is competitive information.
First round of Negotiations with drug makers – They were trying Failed yet.to the Cancel the program In federal court – focused on the most widely used and expensive drugs taken by Medicare enrollees.
These are. 10 medicines And in 2023, the discounted price was the negotiated price, at HHS.
- Januvia: 79%
- Fiasp/Novolog: 76%
- Farsiga: 68%
- Let's say: 67%.
- Jardians: 66%
- Stellar: 66%
- Today: 62%
- Eliquis: 56%
- Income: 53%
- Imbruvica: 38%
The $6 billion savings estimate is based on Medicare spending for these drugs in 2023, Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-Lasure told reporters.
The Congressional Budget Office estimates that the negotiation program will save Medicare $100 billion over ten years.
The total reduction that Medicare received in this first round was more than some industry experts had expected.
“The results were a little more aggressive/surprising than I thought the outlook would be,” said Spencer Perlman, director of healthcare research at Veda Partners, a policy advisory firm for institutional investors.
Many Medicare Enrollees who take the prescription drug will see savings at the pharmacy counter, though it depends on Medicare Part D drug coverage, Perlman said. he said. For many, drug costs are based on drug list prices – before rebates and discounts for Part D plans – and those prices tend to be lower because of the program.
By 2023, nearly 9 million patients will take at least one of the negotiable drugs, spending $3.9 billion out of pocket, according to HHS. The agency gave a hypothetical example of a Medicare enrollee taking Stelara, which treats several autoimmune diseases, for a 25% co-insurance payment. The senior can be booked for $3,400 today for a 30-day supply, but will pay $1,100 after the bargain price takes effect. (Actual savings depend on a person's drug plan.)
However, subscriber benefits will be muted. Another offer Inflation Reduction Act – $2,000 annual out-of-pocket costs in Part D plans, which will take effect in January. This limits patients' exposure to high drug costs.
the powerful pharmaceutical industry, which has long fought allowing Medicare to negotiate prices and is not used to defeat on Capitol Hill; Trying to stop The negotiations led to several lawsuits in federal courts in the US claiming that the program was unconstitutional in various ways. Many said they would be forced to participate or otherwise face severe penalties or withdraw from the Medicare and Medicaid markets.
But just last week, a federal district court judge in Ohio rejected one of the challenges, marking the seventh loss in a legal battle by drugmakers and their allies.
Although drugmakers have repeatedly said that price negotiations will hurt their businesses and reduce innovation, many have suggested in recent earnings calls that the impact will be more muted.
“Having seen the final price, we are more confident in our ability to leverage the IRA's impact on Eliquis,” said Chris Boerner, CEO of Bristol Myers Squibb, adding, “I want to continue to stress that we strongly oppose it.” Government rate adjustment under IRA.
“While in the short term this may be manageable with our first set of drugs, in the long term, this policy is not good for innovation. [or] It's good for patients in the United States,” said Vasanth Narasimhan, CEO of Novartis, which makes the heart failure drug Intresto.
Other manufacturers with drugs in early negotiations include Merck, Johnson & Johnson's Janssen Division, Novo Nordisk and AstraZeneca, among others.
Drugmakers are more concerned about the upcoming round of negotiations, which will involve a large number of drugs, some of which may not already come with heavy discounts, experts said.
“We're going from, 'Now we've opened a Pandora's box of price negotiations,' and is this going to spill over into commercial markets, as everyone thinks?” For Health Policy and Economics, Medicare says the savings are “nontrivial, but not game-changing.”
A major industry lobby group has warned that the deal scheme – which it calls “government pricing” – will harm research into new drugs.
Steve Uble, CEO of the Pharmaceutical Research and Manufacturers of America, known as PhRMA, said in a statement that it will fundamentally change the incentives companies have for drug development. “Drug development is a long and complex process, and the negative effects of these changes may not be fully realized for decades.”
CMS considered a number of factors when developing its initial offer, including the clinical benefits of drugs and the cost of alternatives, among others. The agency held hearings for patients and others to comment on the proposed drugs.
Health and Human Services Secretary Xavier Becerra told reporters that there was “significant back and forth” during the negotiations.
“Throughout the negotiations, they had the opportunity to present their own offers and offer rebuttals,” he said. “After a lot of back and forth, we either received an offer or a company accepted our offer.”
After this first round, Medicare will be able to negotiate prices for another 15 drugs in 2027 and again in 2028. The number will rise to 20 drugs per year for 2029 and beyond.
In the first two years of the negotiations, only Class D drugs purchased at pharmacies are included. Medicare will add prescription-only Class B drugs by 2028.
CMS will notify the names of the drugs in the next round by February 1. The negotiated rates will take effect in 2027.
This article and story has been updated with additional information.