The first 10 drugs selected for Medicare price negotiation will be announced by Sep. 1 and will set the stage for unprecedented government action regulating drug costs, with billions of dollars at stake and scores of patients standing to benefit.
Once the initial batch of drugs chosen for negotiations are announced, the years-long negotiation process — currently being challenged in courts — will kick off. The manufacturers of the Medicare Part D-covered drugs picked by the Centers for Medicare and Medicaid Services (CMS) will have one month to send in their agreements saying they will engage in the negotiation process.
Drugmakers who don’t agree to negotiate, and the spate of lawsuits makes it clear that many disagree with the process as it stands now, will have to risk ending their lucrative relationships with Medicare or facing heavy excise taxes.
Steve Knievel, access to medicines advocate at the progressive nonprofit Public Citizen, was skeptical of companies not agreeing to the negotiations, despite their public and legal objections.
“The penalties in the law are substantial if they’re allowed to stand,” Knievel said. “I think it would behoove [the plaintiffs] to continue to move forward and act as if, you know, the law is not going to be struck down.”
While they may enter negotiations kicking and screaming, Knievel argued that drug companies have likely been able to enjoy enormous profits from the first 10 drugs chosen for negotiations, regardless of what they end up being.
“It’s obscene. These drug corporations have made — across the board for the first set of drugs that are going to be negotiated — they’ve made tens of billions of dollars already,” said Knievel. “In most cases, the bulk of that has come from United States consumers, and you know oftentimes the bulk has come from Medicare.”
Many drugs covered by Medicare are also still exempted from negotiations, including those that have generic or biosimilar versions available; drugs less than seven-years-old; biological products less than 11-years-old; and orphan drugs, which are used to treat rare diseases and are not expected to generate profit.
CMS has given no indication as to what drugs will make the first round, but some have already speculated which will make the list. A study published in March identified 10 potential candidates based on gross Medicare Part B and Part D spending in 2020.
The selection process for the drugs is guided financially, with federal law directing that they come from medicines covered by Medicare Part B and D that account for the highest total spending.
Several of the medications projected to make the cut come from plaintiffs suing to stop the negotiation process. These included Eliquis from Bristol Myers Squibb, Xarelto from Johnson & Johnson and Januvia from Merck & Co.
These three drugs alone accounted for $18.5 billion in gross Medicare Part D spending in 2020.
In a projection from physicians released in September 2020, shortly after the Inflation Reduction Act (IRA) was signed into law, these three medications also made the list of those likely to be in CMS’s sights. Other drugs anticipated to show up on the list include the diabetes medication Jardiance, the breast cancer treatment Ibrance and Symbicort, which is used to treat asthma and COPD.
As KFF noted in an analysis released earlier this year, the 10 top-selling prescription drugs covered under Medicare Part D in 2021 did not account for even one percent of all covered medications but represented more than a fifth of gross spending.
“A lot of the likely drugs include blood thinners, diabetes medication, cancer drugs. So many of these drugs are for chronic conditions and cost Medicare’s several thousands of dollars per beneficiary that’s taking it” Bailey Reavis, federal relations associate at Families USA, told The Hill.
While the lowered prices generated by the negotiation program won’t go into effect until 2026, the Sep. 1 date marks the beginning of negotiations, officially making the process “real and tangible,” as Reavis noted.
“People on these medications are going to know that the price that they’re paying is likely to go down and Medicare is going to be saving, you know, millions of dollars,” she said.
Tricia Neuman, executive Director for KFF’s program on Medicare policy, said that while the impact of negotiations will not be felt by consumers for a few more years, the start of the price control program “sends a signal that Medicare is doing more to address concerns about high drug costs, both to help people on Medicare and also to address concerns about Medicare spending.”
Neuman also added that the start of negotiations will mark Medicare’s entry into new territory as it had been disallowed from negotiating prices before the passage of the IRA.
“Medicare uses fee schedules for a number of different providers without having a process that is similar in terms of engaging…with drug companies,” she noted. “So, the process, as it’s been described, looks quite different from the process that Medicare has used in the past.”