Medicare negotiations: Biden administration to reveal prices for first 10 drugs

• Medicare will reveal the prices of the first 10 prescription drugs that were negotiated with the Biden administration.
• Medicare could save $6 billion in net costs with the new prices, according to government estimates based on 2023 data.
• The pharmaceutical industry has opposed a policy that aims to make costly medications more affordable for older Americans, marking a milestone in a controversial process.
• The Inflation Reduction Act was signed by President Joe Biden one day before its second anniversary.

On Thursday, the Biden administration will reveal the prices of the first 10 prescription drugs that were the subject of negotiations between drug manufacturers and Medicare, marking a significant achievement in a contentious effort to make expensive medications more affordable for seniors.

According to senior administration officials, the estimated savings for the Medicare program from the new negotiated medication prices is approximately $6 billion in 2026. This is based on the projected savings if these prices were in effect in 2023.

Medicare enrollees will save $1.5 billion in out-of-pocket costs by 2026 due to the Biden administration's new drug pricing plan.

""The negotiated prices of these drugs are not just about costs, but about ensuring that individuals can live longer, healthier lives, as being able to afford them can make a significant difference for many people," Chiquita Brooks-LaSure, the administrator for the Centers for Medicare and Medicaid Services, stated to reporters."

The Inflation Reduction Act, signed by President Joe Biden one day before its second anniversary, granted Medicare the authority to negotiate drug prices with manufacturers for the first time in the program's nearly 60-year history.

In August 2023, the administration revealed the initial batch of medications to be discussed in price negotiations, initiating a nearly year-long bargaining process that concluded at the start of the month.

The final prices for Medicare drugs provide drugmakers with a preview of the revenue they may lose in the future due to their opposition to the policy. This also establishes a precedent for future Medicare drug price negotiations, which will commence in 2025 and beyond.

On Thursday, President Biden declared the recently agreed-upon prices as a "historic achievement" due to the Inflation Reduction Act. He highlighted Vice President Harris' crucial vote in the Senate that helped pass the law in 2022.

The Democratic presidential nominee, Harris, stated in a statement that she was proud to cast the deciding vote, emphasizing that there is still work to be done to reduce healthcare costs for Americans.

Harris stated on Thursday that the upcoming announcement would significantly impact the lives of many loved ones across the country, and that the process would continue with the selection of additional prescription drugs for future negotiations.

Here are the 10 drugs that were subject to the initial talks:

• Eliquis, manufactured by, is employed to hinder blood clotting and minimize the likelihood of stroke.
• Jardiance, a product of Boehringer Ingelheim and , is utilized to regulate blood sugar levels in individuals with Type 2 diabetes.
• Xarelto, manufactured by , is employed to prevent blood clotting and minimize the likelihood of stroke.
• People with Type 2 diabetes can lower their blood sugar levels with Januvia, a medication produced by.
• The medication Farxiga, produced by, is utilized to manage Type 2 diabetes, heart failure, and chronic kidney disease.
• Certain types of heart failure can be treated with Entresto, which is manufactured by.
• Rheumatoid arthritis and other autoimmune diseases can be treated with Enbrel, a medication produced by.
• J&J's Imbruvica is used to treat various blood cancer types.
• Janssen's Stelara is used to treat autoimmune diseases such as Crohn's disease.
• Fiasp and NovoLog, insulins made by .

Medicare Part D plans, which are managed by private insurers, provide prescription drug coverage for older Americans at retail pharmacies. The Biden administration will disclose the maximum fair price for each drug, which is the highest amount that a Medicare Part D plan sponsor or beneficiary can pay for treatment.

Medicare's initial offer for each medication was determined through a lengthy negotiation process that involved months of back-and-forth price offers between companies and Medicare, taking into account sales volume data, federal financial support for the drug's development, and data on pending or approved patent applications and exclusivities, among other information.

Comparing the new negotiated price of a drug with its current list price, which is the price a manufacturer received from a wholesaler, distributor, or direct purchaser before any discounts, is challenging.

Medicare Part D plans pay heavily rebated net prices for many of the 10 medications, but the exact amount is unknown due to confidential negotiations, according to Leigh Purvis, a prescription drug policy principal with AARP Public Policy Institute.

Medicare's new negotiation powers have been supported by AARP, a lobby group representing individuals over 50.

"Medicare Part D was already paying net prices for drugs, and people are trying to determine if the negotiated prices are lower than those net prices. However, since rebates are confidential, it will be challenging to make that comparison."

The senior administration official stated that the comparison of negotiated prices and net prices paid by Medicare is confidential information.

Medicare Part D plans have unique rebate agreements, and the government is restricted from disclosing any information regarding these agreements.

The Biden administration is focusing on negotiations to reduce the cost of medications in the U.S., a goal that has been supported by some congressional Democrats and consumer advocates for years, as many seniors face affordability challenges.

Medicare enrollees who typically take four to five prescription drugs monthly are anticipated to benefit financially from the upcoming price negotiations.

Last year, a senior administration official disclosed that nearly 10% of Medicare enrollees aged 65 and older, and about 20% of those under 65, face difficulties in affording medications.

The pharmaceutical industry considers the process a threat to its revenue growth, profits, and drug innovation. Several drugmakers and trade groups filed lawsuits last year to halt the negotiations and declare them unconstitutional.

District courts are yet to make decisions on suits brought by Merck and Novartis against price talks, which overlap with rejected suits from Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, and J&J.

Medicare Part D's top 50 highest-spending drugs include the 10 most expensive ones.

According to CMS, the 10 medicines accounted for $50.5 billion, or about 20%, of total Part D prescription drug costs from June 1, 2022, to May 31, 2023. In 2022, 9 million seniors spent $3.4 billion out of pocket on the 10 drugs, with some paying more than $6,000 per year for just one of the medications on the list, according to the Biden administration.

Generic versions of the medications have not been available for at least seven years, or 11 years for biological products like vaccines.

Approximately 66 million individuals in the U.S. are covered by Medicare, with 50.5 million enrolled in Part D plans, according to 2023 data from the health policy research organization KFF.

What happens next?

The new drug prices, which were negotiated, will be published by CMS by March next year. These prices will take effect on January 1, 2026.

The Biden administration will reveal up to 15 additional drugs for price negotiations by February 2025, with agreed-upon prices taking effect in 2027. Drugmakers will have until the end of that month to decide whether to participate in the program.

Starting in 2029, CMS can negotiate prices for 20 medications annually.

Purvis stated that people often become preoccupied with the fact that their drug is not included in the list, but it will eventually be added if they are using a drug that is causing high expenses.

Medicare Part D drugs will be the only ones selected for coverage in the first two years of negotiations, while more specialized drugs covered by Medicare Part B, typically administered by doctors, will be added in 2028.

Experts predicted that if elected president, Harris would broaden the scope of negotiations.

Medicare will improve its process as it progresses, according to Purvis.

As the negotiation program takes off and Medicare improves its drug negotiation skills, we anticipate billions of dollars in savings to taxpayers to begin flowing.