The Biden administration today announced the first 10 prescription medications over whose prices it will negotiate for payment under Medicare Part D. The list includes several heavily advertised drugs for treating diabetes, heart failure, and other chronic diseases.
Authority for the Centers for Medicare and Medicaid Services (CMS) to conduct the first-ever price negotiations directly with pharmaceutical companies was included under the Inflation Reduction Act of 2022. Until then CMS had been prohibited from doing so.1
In a statement, CMS Administrator Chiquita Brooks-LaSure called the announcement “a significant and historic moment” for Medicare. “Our goal with these negotiations is to improve access to some of the costliest drugs for millions of people with Medicare while driving competitions and innovation,” LaSure said.2
“Thanks to the landmark Inflation Reduction Act, we are closer to reaching President Biden’s goal of increasing availability and lowering prescription drug costs for all Americans,” Xavier Becerra, secretary of the US Department of Health and Human Services (HHS) said in an HHS statement.1
The drugs whose prices the government wants to negotiate and their uses include:
According to HHS, the drugs accounted for $50.5 billion in total Part D gross covered prescription drug costs between June 1, 2022 and May 3, 2023, the time period used to determine which drugs were eligible for negotiation. Part D enrollees taking these drugs paid $3.4 billion in out-of-pocket expenses for them in 2022.1
The Congressional Budget Office has estimated that negotiating prices for them will save Medicare close to $100 billion over a decade.
Pharmaceutical manufacturers with a drug included in the list have until October 1 to decide whether to participate in the negotiations. Those that don’t will either have to pay an excise tax or no longer have their products included in Medicare and Medicaid. Negotiations will continue until August 1, 2024, after which CMS will announce the “maximum fair price” agreed upon for each drug. The prices will take effect at the start of 2026.2
Three organizations—the National Infusion Center Association, the Global Colon Cancer Association and Pharmaceutical Research and Manufacturers of America, have sued in federal court to try and stop the negotiations.
If the negotiating program is allowed to continue, CMS will select 15 additional drugs covered under Medicare Part D for 2027, 15 covered under both Parts B and D for 2028, and 20 drugs for each year after that.1