HQ Team
August 30, 2023: The US government, for the first time, has started negotiating prices of prescription drugs directly with companies in a bid to lower healthcare costs under an Inflation Reduction Act.
The Centers for Medicare & Medicaid Services (CMS), which administers a government program, Medicare that provides health insurance for adults and children with limited income, announced the program will first target 10 drugs, including blood thinners and diabetes.
It includes blood thinner Eliquis made by Bristol-Myers Squibb Company, Boehringer Ingelheim’s diabetic drug Jardiance, Janssen Pharmaceuticals, Inc.’s Xarelto blood thinner, and Merck’s Januvia, a diabetic medicine.
Other medicines in the first round of negations include Farxiga, Entresto, Enbrel, Imbruvica, Stelara and Fiasp.
Effective from 2026
The negotiations with participating drug companies will occur in 2023 and 2024, and any negotiated prices will become effective beginning in 2026, according to an emailed statement.
Beneficiaries of Medicare, taking the 10 drugs covered under what is known as Part D and selected for negotiation, paid a total of $3.4 billion in out-of-pocket costs in 2022 for these drugs.
The CMS spent $50.5 billion between June 1, 2022, and May 31, 2023, on the 10 drugs, which was the time period used to determine which medicines were eligible for negotiation, according to the statement.
The figure was about 20% of the total cost of drugs in the Medicare Part D prescription drug program.
Key priority
The government under the Inflation Reduction Act has made lowering prescription drug costs and improving access to innovative therapies a key priority.
“Allowing Medicare to negotiate prescription drug prices will strengthen the program’s ability to serve people with Medicare now and for generations to come,” according to the statement.
The negotiation process will consider the selected drug’s clinical benefit, the extent to which it fulfils an unmet medical need, and its impact on people who rely on Medicare.
Other considerations, such as costs associated with research and development as well as production and distribution for selected drugs would also be considered during the talks.
Additional drugs
“As a result of negotiations, people with Medicare will have access to innovative, life-saving treatments at lower costs to Medicare.”
The CMS will publish any agreed-upon negotiated prices for the selected drugs by September 1, 2024. Those prices will come into effect from January 1, 2026.
In future, the CMS will select about 15 more drugs covered under Part D for 2027, up to 15 additional drugs for 2028 (including drugs covered under Part B and Part D), and up to 20 more drugs for each year after that, as outlined in the Inflation Reduction Act.
