First 10 drugs subject to CMS price negotiations
The Biden Administration has released a list of the first 10 drugs subject to Medicare price negotiations, including major blood thinners and diabetes medications, as part of the Democrats’ drug pricing reform law.
“For far too long, Americans have paid more for prescription drugs than any major economy,” President Joe Biden said in a statement. “And while the pharmaceutical industry makes record profits, millions of Americans are forced to choose between paying for medications they need to live or paying for food, rent, and other basic necessities. Those days are ending.”
The inaugural list includes Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Novo Nordisk insulins like Fiasp and Novolog.
The drugs treat a range of common medical conditions including cardiovascular disease, diabetes, cancer, and various autoimmune disorders like psoriasis, rheumatoid arthritis, and Crohn’s. About 8,247,000 Medicare enrollees used the selected drugs to treat their conditions and paid as high as $6,500 annually per drug in 2022.
The first set of drugs were selected from the top 50 eligible Part D drugs that cost Medicare the most money based on expenditures from June 1, 200 to May 31, 2023, the time period the Centers for Medicare and Medicaid Services (CMS) used to determine eligible drugs. The selected drugs cost $50.5 billion, or 20% of total Part D gross covered prescription drug costs, according to CMS. Only medicines that had been on the market without competition for several years are eligible.
Price negotiation process
In shaping the initial offer, CMS will consider evidence related to alternative therapies and factors like research costs, development expenses, and the production and distribution outlay linked to the chosen drug.
By Feb. 1, 2024, CMS will extend its first offer to drug companies engaged in the Negotiation Program. This proposal will detail the maximum fair price recommended by CMS, along with a brief explanation. Companies will then have 30 days to respond, either by accepting the offer or offering a counterproposal.
In the case that a maximum fair price is not agreed upon through the initial counter or counteroffer, each participating drug company will have the opportunity for up to three negotiation meetings through Spring and Summer of 2023 before the deadline of Aug. 1, 2024.
If pharmaceutical companies choose not to comply with the process, they will be subject to a potential excise tax of up to 95% of the drugs’ U.S. sales or withdraw their products off the Medicaid and Medicare markets.
The current list of drugs are medication patients can pick up at the pharmacy themselves. Price negotiations for medications administered by healthcare professionals, Part B drugs, won’t be negotiated until 2028.
After price negotiations for the initial list of drugs, the Health and Human Services (HHS) secretary will engage in negotiations for an additional 15 drugs in 2027, followed by 15 Part D and Part D drugs in 2028. The number will increase to 20 Part D and Part B drugs by 2029 and onward.
Currently, pharmaceutical companies are preparing and filing lawsuits against CMS, citing violations in the Administrative Procedure Act, among other complaints. In one lawsuit, pharma giant Merck claims the financial penalty will be as high as 1,900% of sales, but the Biden Administration is undeterred.
“…My economic vision for growing the economy from the middle out and the bottom up – not the top down. And it’s working. That’s why Big Pharma has already filed eight lawsuits against my Administration and spent nearly $400 million last year to try to stop our progress,” Biden stated. “Let me be clear: I am not backing down. There is no reason why Americans should be forced to pay more than any developed nation for life-saving prescriptions just to pad Big Pharma’s pockets.”