Medicare will negotiate the prices of top-selling drugs for blood clots, diabetes, cancer and arthritis, flexing newly granted authority that for the first time allows the insurance program to use its market power to lower the cost of certain medicines. On August 29, 2023, the Biden administration released a list of 10 drugs that will be included in the first round of negotiations, which will run over the next year and produce prices that take effect in 2026. Among the drugs on the list are the widely used blood thinners Eliquis and Xarelto, which made their respective makers more than $10 billion in U.S. sales last year, as well as the diabetes treatments Januvia and Jardiance.
More on Selection
Many of the drugs on the list were anticipated in advance of the publication given statutory parameters that govern the list’s creation. Notably, all selected drugs are Part D drugs as required by statute. Part B drugs will not be eligible for selection until 2028. The selected drugs are those eligible drugs with the highest total Medicare Part D spend for the 12-month period between June 1, 2022 to May 31, 2023. Total Medicare Part D spend was determined using gross—not net—prices.
Additionally, the selected list omits any biological products for which a biosimilar manufacturer has submitted a request for a “biosimilar market entry delay,” which requires establishing a high likelihood that the biosimilar would be marketed before September 1, 2025. Biosimilar manufacturers were required to submit such requests by May 22, 2023. According to CMS, zero drugs were excluded from the selected drug list for 2026 as a result of the biosimilar market entry delay. Furthermore, the selected drug list also omits any drugs or biological products that would have qualified for the “small biotech exception.” Manufacturers were required to request the small biotech exception by July 3, 2023. According to CMS, four drugs were determined to be qualified for the small biotech exclusion.
Next Steps
The next step in the process required the primary manufacturers to sign a negotiation agreement with CMS by October 1, 2023. Primary manufacturers also needed submit specific economic, market, and clinical data for the selected drugs by October 2, 2023. The negotiation process between the primary manufacturer and CMS is largely confidential.
While the August 29, 2023 selected drug list is limited to 10 drugs, the statute progressively increases the number of drugs that will be selected annually for future lists: 15 Medicare Part D drugs for 2027, 15 Medicare Part D/B drugs for 2028, and 20 Medicare Part D/B drugs for 2029 and later years.
Responses
Not surprisingly, PhRMA’s issued a strong statement in opposition to the initial list. In a statement from the organization’s CEO, Stephen J. Ubl, he stated: “Politics should not dictate which treatments and cures are worth developing and who should get access to them. The cancer moonshot will not succeed if this administration continues to dismantle the innovation rocket we need to get there. The harm will spread beyond cancer and impact people with rare diseases, mental health illnesses and other terrible diseases.
American patients deserve better. We will continue to fight for solutions that lower costs for patients at the pharmacy counter, address abusive practices by insurers and PBMs and mitigate the harm this law may have for future generations.”
In contrast, the Alliance of Community Health Plans put out an aggressive statement. “This is a great first step for drug affordability, no matter what the bullies at Big Pharma say,” said Ceci Connolly, ACHP’s President and CEO. “Despite all their threats and lawsuits, we know we are on the right path toward better health care for all. Looking ahead, we will continue urging Congress to extend the IRA’s drug negotiation provisions to the commercial market.”
The American College of Rheumatology said while it appreciates lowering costs of drugs like Enbrel and Stelara, they believe policymakers need to combat the “root causes of drug pricing increases,” such as making Medicare Part B reimbursements exempt from sequestration reductions included in the Budget Control Act of 2011.