Medicare will send initial offers to manufacturers of the first ten drugs selected for drug price negotiation under the Inflation Reduction Act, announced the Biden Administration.
Passed into law in 2022, 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. 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.
Last August, the Centers for Medicare and Medicaid Services revealed the first 10 drugs chosen for price negotiation. The list included popular drugs such as BMS and Pfizer's blood thinner, Eliquis; Boehringer Ingelheim and Eli Lilly's diabetes drug, Jardiance; and Bayer and Janssen's blood thinner, Xarelto.
Collectively, more than 8 million people covered by Medicare used these drugs between June 2022 and May 2023, according to CMS data. CMS described the prescription meds as "high expenditure, single source drugs without generic or biosimilar competition."
The pharma industry has pushed back. According to the Biden Adminstration, pharma is litigating nine lawsuits against the price negotiations.
PhRMA, the industry's largest trade group, released the following statement: “This continues to be an exercise to win political points on the campaign trail rather than do what’s in the best interest of patients. Government bureaucrats are operating behind closed doors to set medicine prices without disclosing for months how they arrived at the price or how much patient and provider input was used. This lack of transparency and unchecked authority will have lasting consequences for patients long after this administration is gone.”
The ten drugs are just the tip of the iceberg. Over the next four years, Medicare is poised to select up to 60 drugs for negotiation — and up to 20 additional drugs per year after that.