Anticipated this week, the Biden administration is poised to unveil a roster of the inaugural ten prescription drugs that will undergo federal negotiations as per the novel federal law designed to curtail the expenses associated with Medicare’s high-cost medications.
A groundbreaking advancement, the federal government has been granted the authority to engage in price negotiations for medications intended for elderly Americans, made possible through the Inflation Reduction Act. This comprehensive legislation, ratified by Congress the previous year, also addresses climate and health concerns. The Centers for Medicare and Medicaid Services are mandated to disclose the list of ten drugs by the week’s end, although there are indications from administration officials that this announcement could arrive earlier within the week.
Advocates for consumers and seniors have long advocated for initiatives that would rein in the escalating prices of drugs for individuals enrolled in Medicare, as well as for taxpayers. Medicare, the federal health program tailored for adults aged 65 and above, as well as disabled individuals, has traditionally established reimbursement rates for medical services furnished by medical professionals and healthcare facilities. However, the ability to negotiate drug prices had been absent due to legislation from 2003, which expanded the coverage of prescription drugs within Medicare.
Experts suggest that certain costly and commonly prescribed drugs utilized for conditions such as arthritis, cancer, diabetes, or heart disease could potentially be earmarked for negotiation. The pricing adjustments for the initial assortment of ten drugs are slated to take effect in 2026. Subsequently, in the following couple of years, an additional thirty drugs will be selected for price negotiations, commencing in 2027 and 2028.
Leigh Purvis, a principal specializing in prescription drug policies at the AARP Public Policy Institute, emphasized, “The negotiation process is on track to effectively target drugs that are extensively utilized, exorbitantly priced, or exhibit both characteristics.”
Big Pharma Heads to Court: Legal Showdown Begins
However, the pharmaceutical sector is actively contesting the drug negotiation efforts. The major players in the pharmaceutical industry, including Big Pharma and its allies, have initiated 8 legal actions aimed at obstructing the progress of drug negotiations. Noteworthy entities such as AstraZeneca, Astellas Pharma, Bristol Myers Squibb, Johnson & Johnson, Merck, along with the industry’s representative body, PhRMA, as well as the chambers of commerce at the national, Michigan, and Ohio levels, have all lodged legal challenges.
These lawsuits are based on distinct legal frameworks that argue for the suspension of drug negotiations. For instance, AstraZeneca recently filed a lawsuit in the U.S. District Court in Delaware, asserting that the drug negotiation provisions within the Inflation Reduction Act are in direct conflict with another federal law, the Orphan Drug Act. The latter legislation aims to foster investments by the drug industry in new treatments for rare diseases.
Dave Fredrickson, AstraZeneca’s Executive Vice President of Oncology, stated that if drug negotiations continue unhindered, patients in the United States could experience delays in accessing groundbreaking scientific innovations compared to other global regions.
Kelly Bagby, Vice President of Litigation for the AARP Foundation, suggests that the increasing number of lawsuits filed across different jurisdictions likely indicates a strategy to expedite the case’s journey to the U.S. Supreme Court. Bagby explained, “Their aim appears to be building enough momentum to swiftly reach the Supreme Court.”
Xarelto Patient Explores Options for Negotiated Discount
Eagerly Awaiting Relief: Seniors Anticipate Negotiated Discounts on Costly Prescription Medications
Ellen Farmer, a 64-year-old resident of Massachusetts, is among the seniors holding their breath to discover which prescription drugs might become more affordable through negotiation.
Ellen relies on Xarelto to manage atrial fibrillation, a type of abnormal heartbeat. Her physician emphasized the importance of taking this blood thinner to mitigate the risks of blood clots, heart attacks, or strokes.
The staggering reality hit her when the pharmacist revealed that her monthly copayment for Xarelto, even with insurance, would amount to a steep $1,000. She expressed, “I was shocked and terrified. There was no way I could afford that.”
Ellen is a beneficiary of Medicare due to a disability stemming from her heart condition. Leveraging the subsidies made available to certain low-income Medicare recipients under the Inflation Reduction Act (IRA), her monthly copayment for the medication has been significantly reduced.
She finds solace in the potential for her medication’s price to be further slashed through the ongoing drug negotiations. Ellen passionately expressed, “This gives me hope. Too many individuals in this country struggle to bear the costs of vital medications necessary for their survival. Nobody should ever have to make a trade-off between financial stability and their well-being.”
Highlighted Advantages: From Insulin Expenses to Vaccine Coverage
The legislation doesn’t grant Medicare unrestricted authority in choosing drugs for negotiation. Only retail drugs that have been on the market for nine years without a competing generic version become eligible. For physician-administered drugs, negotiation becomes applicable after a 13-year period.
While the benefits of negotiated prices won’t be apparent to consumers until 2026, there are other immediate advantages. In 2025, those enrolled in Medicare’s Part D drug plans will witness a cap of $2,000 per year on their out-of-pocket prescription expenses. Additionally, the law enforces a limit of $35 per dose for Medicare beneficiaries’ insulin expenses, starting from this year. While this provision doesn’t extend to individuals covered by private insurance, three major insulin manufacturers have pledged to reduce prices by over 70% for their respective products.
Medicare recipients are also relieved from bearing out-of-pocket costs for recommended vaccines like shingles, whooping cough, and tetanus.
The federal law also mandates drugmakers to pay federal rebates if they raise prices beyond inflation levels. In response, Medicare announced a focus on 43 drugs with price hikes exceeding this threshold. Officials anticipate that these rebates will not only result in lower costs for consumers but will also trim Medicare’s expenditures.
Leigh Purvis from the AARP Public Policy Institute highlighted that even individuals who don’t rely on costly prescriptions will reap the benefits. The health-related provisions within the federal law are projected to save taxpayers a substantial $173 billion over the upcoming decade, as analyzed by the Committee for a Responsible Federal Budget.
Purvis affirmed, “The negotiation process will lead to savings that will be felt across the board.”