WASHINGTON — On Tues., Aug. 29 Medicare announced it will negotiate prices for 10 drugs, including major blood thinners and diabetes medications, in the first round of its negotiation program created in the Inflation Reduction Act’s drug pricing reform law.
The drugs include Bristol Myers Squibb’s blood thinner Eliquis, Boehringer Ingelheim and Eli Lilly’s diabetes drug Jardiance, Johnson & Johnson’s blood thinner Xarelto, Merck’s diabetes drug Januvia, AstraZeneca’s diabetes drug Farxiga, Novartis’ heart failure treatment Entresto, Amgen’s rheumatoid arthritis drug Enbrel, Johnson & Johnson and AbbVie’s blood cancer treatment Imbruvica, J&J’s anti-inflammatory medicine Stelara, and Novo Nordisk insulins that go by names including Fiasp and NovoLog.
The new prices will be announced on Sept. 1, 2024, and will go into effect on Jan. 1, 2026. The drugs were chosen from a list of 50 treatments that cost Medicare’s pharmacy drug benefit the most money. The selected medicines cost Medicare more than $50 billion and made up 20% of the Medicare program’s pharmacy drug costs over a one-year period, the Department of Health and Human Services said.
| DRUG | MANUFACTURER | TOTAL COST TO MEDICARE |
| Eliquis | Bristol Myers Squibb | $16.5 billion |
| Jardiance | Boehringer Ingelheim/Eli Lilly | $7 billion |
| Xarelto | Johnson & Johnson | $6 billion |
| Januvia | Merck | $4 billion |
| Farxiga | AstraZeneca | $3.3 billion |
| Entresto | Novartis | $2.9 billion |
| Enbrel | Amgen | $2.8 billion |
| Imbruvica | Johnson & Johnson/AbbVie | $2.7 billion |
| Stelara | Johnson & Johnson | $2.6 billion |
| NovoLog/Fiasp | Novo Nordisk | $2.6 billion |
Among the medicines chosen for price negotiation are treatments that have been key products for some of the largest pharmaceutical companies in the world. So far, stocks of these drugmakers have been relatively insulated from worries about the law. However, investors may become more skittish now that the products have been named – and even more so as the actual discounts for those medicines roll out.
“Medicare spends $50 billion a year on these 10 drugs and American seniors are spending $3.4 billion in out-of-pocket costs,” President Biden said. The president also attempted to tie negotiations to his so-called “Bidenomics” plan, saying to applause that the plan “is also going to lower the federal deficit.”
Despite the administration’s revelry, there’s a chance that the program will never actually go into effect. Several of the companies that make the medicines selected for the negotiation program have sued the Biden administration in courts across the country, claiming the program is unconstitutional, including Merck, Bristol Myers Squibb, Boehringer Ingelheim, Johnson & Johnson, and AstraZeneca. The U.S. Chamber of Commerce requested a preliminary injunction, which would immediately stop the law’s implementation.
“The celebration at the White House is premature because they’re attempting to avoid all of the very real world negative side effects,” said Neil Bradley, the chief policy officer at the Chamber of Commerce.
Asked earlier in the day about potential legal barriers, Neera Tanden, director of the Domestic Policy Council, downplayed the threat.
“We are confident in the law and we should recognize there is no part of the Constitution that prohibits Medicare drug negotiation,” she told reporters.
The negotiation program’s first tranche of drugs is starting with 10 drugs that patients can pick up at the pharmacy counter. The agency will negotiate an additional 15 Part D drugs in 2027, another 15 Part D and Part B drugs for 2028, and another 20 Part D and Part B drugs for 2029 and onward.
The minimum discounts Medicare will negotiate for each drug will range from 25% off a drug’s list price to 60%, depending on how long it’s been on the market.
Once the drugs are selected, CMS officials will identify drugs that are in the same therapeutic class, if any exist, and consider their net prices in the agency’s initial offer to drugmakers. The agency will also evaluate a drug’s clinical benefit, including comparative effectiveness data, whether the drug meets an unmet medical need, and the drug’s impact on “specific populations,” the guidance states.