Medicare drug price negotiations what’s ahead in 2024

U.S. patients and drugmakers will get a primary glimpse of how much Medicare can negotiate down drug prices in 2024, setting the precedent for a controversial process that will affect what seniors pay for dozens of medicines by the top of the last decade. 

It is also a pivotal 12 months for the lawsuits that drugmakers – including Merck, Johnson & Johnson and Bristol Myers Squibb – have filed against the value talks. Decisions could come down in among the cases next 12 months, which could eventually escalate the problem to the Supreme Court.

President Joe Biden’s Inflation Reduction Act, which passed in a party-line vote last 12 months, gave Medicare the authority to directly hash out drug prices with manufacturers for the primary time within the federal program’s nearly 60-year history. 

Medicare is negotiating prices for the primary round of 10 prescribed drugs in a bid to make those costly treatments more cost-effective for older Americans. By the autumn, the federal government will publish the agreed-upon prices for those medications, which is able to go into effect in 2026. 

In 2022, 9 million seniors spent $3.4 billion out of pocket on the ten drugs, and a few paid greater than $6,000 per 12 months for just considered one of the medications on the list, in response to the Biden administration.

Nearly 10% of Medicare enrollees ages 65 and older, and 20% of those under 65, report challenges in affording drugs, the administration said in August. 

Medicare covers roughly 66 million people within the U.S., and 50.5 million patients are currently enrolled in Part D plans, in response to health policy research organization KFF.

The Biden administration officially kicked off the negotiation process in August when it named the primary round of medicines subject to the value talks. They include diabetes drugs from Merck and AstraZeneca, and blood thinners from Bristol Myers Squibb and Johnson & Johnson.

However the actual negotiation period will begin on Feb. 1, when the Centers for Medicare & Medicaid Services will make initial “maximum fair price” offers for every of the ten drugs chosen. CMS is required to incorporate a justification for why the value is fair based on several aspects.

That features U.S. sales volume data, a manufacturer’s research and development costs, federal financial support for the drug’s development, data on pending or approved patent applications and exclusivities, or a time period when a brand-name drug is shielded from generic competition. 

After receiving the offers, firms have a month to simply accept it or counter it. Negotiations end when CMS and drugmakers reach an agreement. 

If CMS rejects the counteroffer for a drug, the agency can arrange up to 3 meetings with the drugmaker to debate other price options. 

CMS has to make final price offers to the manufacturers by July 15, and people firms have two weeks to simply accept or reject them. If drugmakers fail to agree on a price with Medicare by Aug. 1, they might be forced to pay an excise tax of as much as 95% of a medicine’s U.S. sales or pull all of their drug products from the Medicare and Medicaid markets. 

CMS will publish agreed-upon prices on Sept. 1. 

After the initial round of talks, CMS can negotiate prices for an additional 15 drugs that can go into effect in 2027 and an extra 15 that can go into effect in 2028. The number rises to twenty negotiated medications a 12 months starting in 2029.

CMS will only select Medicare Part D drugs for the medicines covered by the primary two years of negotiations. It can add more specialized drugs covered by Medicare Part B, that are typically administered by doctors, in 2028. 

The legal fight between drugmakers and the Biden administration could also see crucial developments in 2024, as cases may start moving to appeals courts. 

Merck, Johnson & Johnson, Bristol Myers Squibb, AstraZeneca, Novo Nordisk, Novartis and Boehringer Ingelheim are all suing to halt the negotiation process. Each of the businesses has one drug chosen for negotiations.