The White House has included drugs for heart disease, diabetes, and cancer on the list for Medicare price negotiations.

The White House has included drugs for heart disease, diabetes, and cancer on the list for Medicare price negotiations.

Biden Administration Announces First 10 Medicines Subject to Price Negotiation

The Biden administration has taken a significant step towards reducing drug spending by naming the first 10 medicines that will be subject to price negotiations between Medicare and participating drug companies. This groundbreaking program aims to tackle the issue of skyrocketing drug prices in the United States. Although the program is being challenged in court by six major drug companies, the administration remains steadfast in its commitment to providing Americans with Medicare access to affordable lifesaving treatments.

The list of medications, announced by the U.S. Department of Health and Human Services (HHS), includes drugs commonly used by millions of older Americans. In 2022, enrollees of Medicare’s prescription drug program paid a staggering $3.4 billion in out-of-pocket costs for these medicines. The selected drugs represent more than $50 billion in Medicare prescription drug costs, accounting for approximately 20% of total Part D drug costs from June 2022 through May 2023.

Here are the first 10 medications subject to price negotiation:

1. Eliquis – a blood thinner produced by Bristol Myers Squibb and Pfizer.
2. Jardiance – a type 2 diabetes medicine from Boehringer Ingelheim and Eli Lilly.
3. Xarelto – a blood thinner from Johnson & Johnson.
4. Januvia – a type 2 diabetes drug from Merck.
5. Farxiga – a type 2 diabetes drug produced by AstraZeneca.
6. Entresto – a heart failure medication from Novartis.
7. Enbrel – a drug for autoimmune conditions like arthritis and psoriasis, from Amgen.
8. Imbruvica – a blood cancer medication from AbbVie and Johnson & Johnson.
9. Stelara – a monoclonal antibody treatment for autoimmune conditions like Crohn’s disease, psoriasis, and arthritis, from Johnson & Johnson.
10. Fiasp and NovoLog – insulin products for diabetes, produced by Novo Nordisk.

The Inflation Reduction Act of 2022 has now vested the federal government with explicit power to negotiate Medicare drug prices with pharmaceutical companies. This development has garnered positive reactions from experts in the healthcare field. Nick Fabrizio, a senior lecturer in health policy at Cornell University, hailed this as a “landmark day,” noting that it signifies the government’s determination to lower healthcare costs for all Americans.

While the potential for price reduction is promising, Fabrizio points out that implementing and realizing these policy changes will take time and may face legal challenges. He acknowledges that capping the cost of insulin for Medicare enrollees at $35 per month was the first step towards reducing healthcare expenses. Now, with specific drugs being targeted for negotiation, the government aims to have a greater impact on controlling costs.

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The selection process for these drugs was conducted by the U.S. Centers for Medicare & Medicaid Services (CMS) based on their high Medicare spending and lack of price competition from competitors. These medicines have been on the market for several years but have not faced any significant price competition. The aim is to ensure fair pricing for these drugs, benefiting both Medicare recipients and the government.

Negotiations between the federal government and drug companies will occur between 2023 and 2024, with the new prices set to take effect in 2026. Furthermore, CMS will continue the process in the coming years, selecting up to 15 drugs for negotiation in 2027, another 15 in 2028, and potentially as many as 20 more drugs annually thereafter.

The ability to negotiate drug prices under this program is projected to save the government an estimated $98.5 billion over a decade, as reported by The New York Times. However, not all drug makers are in favor of this initiative. Pharmaceutical Research and Manufacturers of America (PhRMA) president and CEO, Stephen Ubl, criticized the government’s approach, suggesting that the selection process lacked oversight and input from patients and doctors. Ubl warned that allowing a single government agency to arbitrarily set drug prices could have significant negative consequences even after the current administration leaves office.

Companies that choose not to negotiate on pricing will face either a large excise tax or the withdrawal of all their products from both Medicare and Medicaid. Already, six pharmaceutical manufacturers, including Astellas Pharma, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Johnson & Johnson, and Merck, are suing the Biden administration in an attempt to block the Medicare negotiation program.

Despite the legal challenges and varying opinions on the program, the Biden administration remains committed to ensuring affordable access to innovative and lifesaving treatments for Americans with Medicare. The successful implementation of this negotiation program has the potential to alleviate the financial burden on millions of patients and significantly reduce government spending on prescription drugs. The journey to lower healthcare costs is underway, and the impact of these changes will be closely observed in the years to come.