The Centers for Medicare and Medicaid Services have announced the first 10 drugs chosen for Medicare price negotiation under the Inflation Reduction Act (IRA).
The prescription medicines, which CMS describes as "high expenditure, single source drugs without generic or biosimilar competition" will be subject to the first-ever price negotiations by the U.S. Medicare health program that covers 66 million people.
The list includes:
- BMS and Pfizer's blood thinner, Eliquis
- Boehringer Ingelheim and Eli Lilly's diabetes drug, Jardiance
- Bayer and Janssen's blood thinner, Xarelto
- Merck & Co's diabetes drug, Januvia
- AstraZeneca's diabetes and heart failure drug, Farxiga
- Novartis' heart failure drug, Entresto
- Amgen's rheumatoid arthritis drug, Enbrel
- AbbVie's leukemia treatment, Imbruvica
- J&J's arthritis and Crohn's disease, Stelara
- Insulin from Novo Nordisk
Collectively, more than 8 million people covered by Medicare used these drugs between June 2022 and May 2023, according to CMS data.
According to CMS, drug companies with a selected drug for the negotiation program will have an opportunity to submit data and information on the drugs. This fall, CMS will invite each participating drug company to engage in a meeting on its data submission.
Passed into law last year, the IRA seeks to address inflation by potentially decreasing the federal government's budget deficit, decreasing the costs of prescription drugs, and directing investments toward domestic energy production with an emphasis on clean energy. For drugmakers, the IRA states that drug manufacturers must pay a rebate to the federal government if the prices of certain drugs covered under Medicare Part B and most drugs under Part D rise at a rate that exceeds inflation.
The price change threshold will be determined by average sales and average manufacturer price depending on the drug. If price increases are higher than the inflation rate, then manufacturers will have to pay the difference to Medicare as a rebate.
Many drugmakers are pushing back. Merck was the first to formally challenge the law. The drugmaker argued the program is unconstitutional. According to Merck, the Fifth Amendment requires the U.S. government pay “just compensation” if it takes property for public use — but the IRA allows the government to obtain innovations without providing fair value for them. J&J, Astellas Pharma and BMS have subsequently filed similar suits.