The Department of Health and Human Services plans to release an inventory of 10 Medicare-covered drugs to be negotiated in September, the primary phase of a long-awaited effort to chop costs for seniors.
HHS officials, in a phone call with reporters on Wednesday, outlined the federal government’s roadmap for negotiating drug prices through recent historic powers it has been given under the Inflation Reduction Act. The IRA, signed into law by President Joe Biden in August, authorizes HHS to barter prices directly with drug corporations for drugs that cost Medicare Parts D and B essentially the most money.
Medicare Part D covers prescription drugs that seniors fill at retail pharmacies. Part B covers more specialized medicines which can be often given in doctor’s offices or hospitals.
In the primary phase of this system, Health Secretary Xavier Becerra will select 10 drugs from the list of the 50 costliest for Medicare Part D. To qualify, a drug will need to have been available on the market for not less than seven years without generic competition, or 11 years for biologics akin to vaccines .
The Health Minister will make the list public in September 2023 and HHS will make an initial offer to pharmaceutical corporations in February 2024. Corporations will have 30 days to just accept the offer or propose a counter offer.
Negotiations will conclude in August 2024 and HHS will publish the agreed costs in September. Negotiated prices for these 10 Medicare Part D drugs will go into effect in January 2026.
Based on the Inflation Control Act, some drugs are excluded from negotiations. This includes drugs for rare diseases, plasma or blood products, drugs developed by small biotech corporations, and drugs on which Medicare spends lower than $200 million.
HHS has not yet released its cards on the drugs it’s taking a look at. The most up-to-date publicly available Medicare Part D drug spending data is from two years ago. The federal government will use Medicare spending data from June 2022 to May 2023 to guide its alternative.
They were the costliest drugs for Medicare Part D in 2020, based on an evaluation of knowledge from the Center for Medicare and Medicaid Services conducted by Bank of America in August. Products will not be price-negotiable as a consequence of generic competition or changes in Medicare spending.
- Eliquis Bristol-Myers, $9.9 billion. It’s an anticoagulant that stops blood from clotting and reduces the danger of stroke.
- Bristol MyersRevlimid, $5.4 billion. This can be a pill used to treat multiple myeloma.
- J&J’s Xarelto, $4.7 billion. That is one other blood thinner.
- Merck’s Januvia, $3.8 billion. It’s a blood sugar lowering pill for individuals with type 2 diabetes.
- Eli LilyTrulicity, $3.2 billion. An injection that helps individuals with type 2 diabetes release insulin.
- Abbvie’s Imbruvica, $2.9 billion. It is a pill for several types of blood cancers.
- Sanofi Lantus Solostar, $2.7 billion. That is an insulin pen for diabetics.
- Eli LilyJardiance, $2.4 billion. It’s a blood sugar lowering pill for type 2 diabetes.
- abbvie‘s Humira, $2.2 billion. It’s a monoclonal antibody for the treatment of rheumatoid arthritis.
- PfizerIbrance, $2.1 billion. It is a breast cancer pill.
- AstraZenecaSymbicort, $1.98 billion. An inhaler that treats asthma and COPD.
Many drugs are concerned with the prevention or treatment of diabetes, blood clots or cancer.
Within the second phase of this system, HHS will select one other 15 Medicare Part D drugs for negotiation, with pricing effective in 2027.
Within the third phase, the federal government can negotiate Part B drugs, with prices going into effect in 2028.
In phase 4, HHS will negotiate prices for 20 Part B or D drugs, effective in 2029. The federal government can negotiate 20 drugs in all subsequent years.
Bank of America, in an analyst’s August note, estimated that the negotiations could reduce drug prices by 25% over the long run for the highest 25 drugs Medicare spends essentially the most on.