Medicare will soon be able to negotiate the prescription drug prices for the first time, under US President Joe Biden鈥檚 Inflation Reduction Act (IRA), which was enacted last year.
Earlier today, the US Department of Health and Human Services (HHS) released a list of ten drugs that will be up for price negotiations. Aimed at driving down healthcare costs and increasing patient power, the IRA allows the Centers for Medicare and Medicaid Services (CMS), the US Government鈥檚 national insurance programme, to provide drugs at reduced prices.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe price negotiation process will consider elements like the drug鈥檚 clinical benefit, the unmet clinical need, and the costs associated with the drug鈥檚 production. The negotiations with manufacturing companies will occur in 2023 and 2024, with any price changes rolling in by 2026.
Blockbuster drugs are aplenty on the list. and 鈥檚 co-developed drug Eliquis (apixaban) and 鈥檚 Enbrel (etanercept) are two of the drugs now available for price negotiation. The first ten drugs to be covered cost a total of $3.4bn in out-of-pocket costs for Medicare enrollees in 2022.
Reacting to the news, William Blair analyst Matt Phipps : 鈥淔or Eliquis, the inclusion does not come as a surprise [鈥 however, it remains to be seen what level of discount will be negotiated with CMS over the coming year, and therefore we expect our estimates [of sales] will likely change.鈥�
鈥淭here had been some debates on whether [Enbrel] would make the sales cut-off on the initial list (versus 2027) given only a quarter of sales are likely from Medicare. Loss of exclusivity for Enbrel is expected in 2029, however, the 60% minimum discount (given how long Enbrel has been on the market) will meaningfully reduce revenues. How much these discounts impact commercial pricing remains to be seen.鈥�
Other drugs include 鈥檚 Januvia (sitagliptin), 鈥檚 Xarelto (rivaroxaban), 鈥檚 Entresto (sacubitril/valsartan), 鈥檚 Imbruvica (ibrutinib), and ‘s Jardiance (empagliflozin), 鈥檚 Farxiga (dapagliflozin), Janssen鈥檚 Stelera (ustekinumab), and 鈥檚 insulin Novolog, which is also available other formulations.
HHS secretary Xavier Becerra : 鈥淔or far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs.鈥�
Rocky road ahead
Since the Biden administration announced plans for drug price negotiations via the Act, pharmaceutical companies have been vociferous in their opposition to the change in drug pricing status-quo. This has involved several lawsuits filed against CMS by key pharma players, advocacy organisations and the US Chamber of Commerce.
MSD 鈥� which states the government must pay just compensation to the owner of private property taken for public use 鈥� in its lawsuit, whereas BMS , commenting that the IRA requires pharmaceutical companies 鈥渢o sell their most innovative and effective medicines at government-dictated prices鈥�.
In a , CMS said it will be conducting patient-focusing listening sessions on the listed drugs in Q3 2023.
CMS administrator Chiquita Brooks-LaSure said: 鈥淎long with the announcement of the selected drugs, we announced CMS鈥� plans to host a patient-focused listening session for each selected drug to hear directly from patients and others.鈥�
