The White House finally unveiled its negotiated Medicare drug prices, bringing 38%-76% reductions to the first 10 drugs, while drawing mixed industry reactions.
- Medicare drug price negotiations are one of the highlighted results of 2022’s Inflation Reduction Act, allowing CMS to negotiate drug prices for the very first time.
- Between 2026 and 2029, CMS will select 60 targeted meds based on a range of factors (costs, usage, “single-source,” lack of generics, etc.) and negotiate their Medicare “maximum fair prices” for a one month supply.
Half of the 10 meds in the ‘Class of 2026’ treat cardiovascular conditions, and these heart drugs saw some of the largest reductions:
- Novartis’ HF drug Entresto (-53% to $295)
- BMS’ anticoagulant Eliquis (-56% to $231)
- Janssen’s anticoagulant Xarelto (-62% to $197)
- BI/Lilly’s HF and diabetes drug Jardiance (-66% to $197)
- AstraZeneca’s HF, diabetes, and CKD drug Farxiga (-68% to $179)
The other five drugs targeted diabetes (Januvia & Fiasp), rheumatoid arthritis (Enbrel), blood cancers (Imbruvica), and psoriasis, Crohn’s disease, and ulcerative colitis (Stelara).
If these first 10 reductions were in place in 2023, it would have cut $6B in prescription costs, which actually represents a much smaller 22% net reduction due to these drugs’ pre-existing Medicare discounts and rebates.
- Looking forward – the negotiations are estimated to cut $1.5B in patients’ out-of-pocket costs in 2026, and save the government over $200B through the first decade.
Although promoted as a win for patient and government spending, these negotiated cuts faced plenty of criticism…
- Some analysis suggests that they won’t meaningfully reduce government spending.
- Pharma lobbies unsurprisingly argued that they will reduce access, should’ve targeted insurers and PBMs, will drive up other costs elsewhere, and are unconstitutional.
- Wall Street noted that many of the drugs already have hefty rebates (so actual reductions are minimal), and some will soon stop having market exclusivity (so generics are coming anyway).
Still, others forecast that these negotiations will have a bigger long-term impact than initial numbers suggest.
The Takeaway
The U.S. spends over $400B annually on prescription meds, placing heavy burdens on patients and significant pressure on politicians. Although truly reigning in these costs will require more than negotiating Medicare list prices, it’s clear that the government is finally taking action on drug costs, and that’s a step in the right direction (unless you work in pharma).
