The Health and Human Services Department plans to publish in September a listing of 10 drugs covered by Medicare that it is going to goal for price negotiations, the primary phase in a protracted awaited effort to chop costs for seniors.
HHS officials, in a call with reporters on Wednesday, laid out the federal government’s road map for negotiating drug prices through historic latest powers it gained under the Inflation Reduction Act. The IRA, signed into law by President Joe Biden in August, empowers HHS to barter prices directly with pharmaceutical corporations for drugs that cost Medicare Parts D and B probably the most money.
Medicare Part D covers prescribed drugs that seniors fill at retail pharmacies. Part B covers more specialized drugs which are typically administered in doctors offices or hospitals.
In the primary phase of this system, Health Secretary Xavier Becerra will select 10 drugs from a listing of the 50 most costly for Medicare Part D. To be eligible, the drug will need to have been available on the market for at the very least seven years without generic competition, or 11 years within the case of biological products resembling vaccines.
The health secretary will make the list public in September 2023, and HHS will make its initial offer to the pharmaceutical corporations in February 2024. The businesses could have 30 days to simply accept the offer or propose a counter offer.
The negotiations will end in August 2024, and HHS will publish the agreed upon costs in September. The negotiated prices for those 10 Medicare Part D drugs will go into effect in January 2026.
Under the Inflation Reduction Act, certain drugs are exempt from the negotiations. This includes drugs for rare diseases, plasma or blood-derived products, drugs developed by small biotech corporations and medicines that Medicare spends lower than $200 million on.
HHS has not yet tipped its cards about which drugs it’s eyeing. Essentially the most current publicly available data on Medicare Part D drug spending is 2 years old. The federal government will use Medicare spending data from June 2022 through May 2023 to guide its selection.
These were the most costly drugs for Medicare Part D in 2020, in response to an evaluation of information from the Center for Medicare and Medicaid Services by Bank of America in August. The products will not be a part of the eventual price negotiations attributable to generic competition or a change in Medicare expenditures.
- Bristol-Myers’ Eliquis, $9.9 billion. It’s an anticoagulant to stop blood clotting to cut back the chance of stroke.
- Bristol Myers‘ Revlimid, $5.4 billion. It’s a pill used to treat multiple myeloma.
- J&J’s Xarelto, $4.7 billion. It’s one other blood thinner.
- Merck’s Januvia, $3.8 billion. It’s a pill to lower blood sugar for individuals with type 2 diabetes.
- Eli Lilly‘s Trulicity, $3.2 billion. An injection that helps individuals with type 2 diabetes release insulin.
- Abbvie’s Imbruvica, $2.9 billion. It’s a pill for several types of blood cancers.
- Sanofi’s Lantus Solostar, $2.7 billion. It’s an insulin pen for diabetes.
- Eli Lilly‘s Jardiance, $2.4 billion. It’s a pill to lower blood sugar for type 2 diabetes.
- Abbvie“s Humira, $2.2 billion. It’s a monoclonal antibody to treat rheumatoid arthritis.
- Pfizer‘s Ibrance, $2.1 billion. It’s a pill to treat breast cancer.
- AstraZeneca‘s Symbicort, $1.98 billion. An inhaler that treats asthma and COPD.
Lots of the drugs relate to prevention or treatment of diabetes, blood clots or cancers.
In this system’s second phase, HHS will select one other 15 Medicare Part D drugs to barter, with prices taking effect in 2027.
Within the third phase, the federal government can negotiate Part B drugs, with prices taking effect in 2028.
In phase 4, HHS will negotiate prices for 20 Part B or D drugs, taking effect in 2029. The federal government can negotiate 20 drugs in all subsequent years.
Bank of America, in an August analyst note, estimated that the negotiations could reduce drug prices by 25% in the long term for the 25 drugs on which Medicare spends probably the most.
