Merck & Co. Inc.’s Januvia brand medication, used to treat Type 2 diabetes.
Daniel Acker | Bloomberg | Getty Images
Medicare is poised to directly negotiate drug prices with the pharmaceutical industry this fall for the primary time in this system’s nearly six-decade history.
The Centers for Medicare and Medicaid Services will unveil, no later than Sept. 1, the list of 10 drugs that it’s targeting this yr, an agency spokesperson said.
Though it remains to be unclear which 10 drugs Medicare will select, several pharmaceutical corporations have already revealed in court filings that they expect 4 of their blockbuster medications to be targeted.
Merck‘s lawyers said the corporate’s Type 2 diabetes drug Januvia will probably be on the list, with its blockbuster cancer immune therapy treatment Keytruda to develop into a goal in subsequent years.
Bristol-Myers Squibb and Johnson & Johnson, in separate filings, said their blood thinners Eliquis and Xarelto will probably be subject to the negotiations this yr. Abbvie said in its own filing that the corporate expects its blood cancer drug Imbruvica may even be a goal within the fall.
These are the opposite six drugs that will likely be subject to negotiations this yr, in line with an evaluation by the Journal of Managed Care and Specialty Pharmacy published in March:
- Jardiance, made by Boehringer Ingelheim, used to treat heart failure
- Enbrel, made by Amgen, used to treat rheumatoid arthritis
- Symbicort, made by AstraZeneca, used to treat asthma
- Ibrance, made by (*10*)Pfizer, used to treat breast cancer
- Xtandi, made by Astellas Pharma, used to treat prostate cancer
- Breo Ellipta, made by GSK, used to administer pulmonary disease
Surge in list prices
The historic negotiations, established by the Inflation Reduction Act, are the cornerstone of the Biden administration’s efforts to slash drug costs.
The list price of Medicare’s top 25 drugs has greater than tripled on average since they first entered the U.S. market, greatly exceeding the speed of inflation, in line with an evaluation published by AARP on Thursday.
AARP is a robust lobbying group that advocates on behalf of individuals ages 50 and older. The group strongly supports the Medicare drug-price negotiation program.
The list price of Januvia has surged 275% since 2006, in line with the AARP. Eliquis has jumped 124% since 2012. Xarelto has increased 168% since 2011, and Imbruvica has risen 108% since 2013.
These price hikes were all significantly higher than the corresponding rate of inflation, which ranged from 31% within the case of Eliquis to 50% within the case of Januvia, in line with AARP.
Merck booked $2.8 billion in revenue from Januvia in 2022. Bristol Myers Squibb generated $11.8 billion in sales from Eliquis last yr. Johnson & Johnson reported $2.47 billion in revenue from Xarelto. And Abbvie posted $4.6 billion in sales of Imbruvica.
People enrolled in Medicare take a median of 4 to 5 prescription drugs a month and increasingly face out-of-pocket costs that many struggle to afford, in line with AARP.
“Increasingly people face cost-sharing that is directly affected by drug price increases,” Leigh Purvis, who analyzes health-care costs for AARP, told reporters on a call Thursday.
One in 5 older adults address high drug prices by not filling a prescription or by skipping a dose to lower your expenses, in line with a study published in Jama Network Open in May.
The industry lobby group Pharmaceutical Research and Manufacturers of America, or PhRMA for short, criticized AARP for using drug list prices of their evaluation.
The list price is ready by manufacturers before discounts and rebates on medications are taken into consideration. PhRMA said net prices, which take these discounts into consideration, are 50% lower than the list prices for brand medications on average. Net prices for brand medicines have been below or consistent with the speed of inflation for the past five years, in line with PhRMA.
Industry goals to dam negotiations
The pharmaceutical industry has filed a torrent of lawsuits to dam the negotiations, arguing that this system is an unconstitutional seizure of their property. Drugmakers view the negotiations as a significant threat to their profits and argue it is going to jeopardize future drug development.
Bristol Myers Squibb, Johnson & Johnson, Merck, the U.S. Chamber of Commerce, and the lobby group Pharmaceutical Research and Manufacturers of America have all sued in separate federal district courts.
Legal experts say the businesses are spreading their lawsuits across the country to extend the possibilities that one among the cases will ultimately find yourself before the Supreme Court.
While the list of 10 drugs will probably be published by September, there’s growing uncertainty over whether the negotiations will move forward on schedule.
The U.S. Chamber of Commerce has asked a federal judge in Ohio to dam this system before Oct. 1. Kelly Bagby, vp of AARP’s legal team, said the chamber faces a heavy lift to persuade the judge that its interests outweigh those of Medicare beneficiaries.
“It is so obvious that the pharmaceutical corporations are not the victims that they are painting themselves to be,” Bagby said on Thursday’s call.
“We are attempting to protect the integrity of the Medicare program for everybody,” she said. “But we are also attempting to allow for older people and vulnerable people to not must make horrible selections — do I get to pay my rent today or do I get to take my lifesaving drugs.”
A spokesperson for PhRMA, the industry group, accused AARP of overlooking the role that insurers and pharmacy profit managers play in rising drug costs.
After the list of drugs is published, the manufacturers must sign agreements to take part in the negotiations by Oct. 1. CMS will then make an initial price offer to the businesses in February 2024. The manufacturers then have a month to make a counteroffer.
The negotiations end in August 2024, with prices published the next month. The reduced prices go into effect in January 2026.