Biotech
Thursday, August 15th, 2024 2:52 pm EDT
Key Points
- Medicare Price Negotiations: For the first time, Medicare is negotiating prescription drug prices under the Inflation Reduction Act, with the goal of lowering costs for seniors. The first 10 drugs selected include treatments for conditions like diabetes, cancer, and heart disease.
- Projected Savings: The Biden administration estimates that these negotiations will save Medicare $6 billion in 2026, with enrollees saving $1.5 billion in out-of-pocket costs that year.
- Industry Backlash: Pharmaceutical companies strongly oppose the negotiations, arguing that it will harm innovation and reduce access to new treatments, with some filing lawsuits to challenge the process.
The Biden administration has announced the first 10 prescription drugs that will undergo price negotiations between drugmakers and Medicare, marking a significant milestone aimed at making expensive medications more affordable for older Americans. These negotiations are part of the Inflation Reduction Act, which gave Medicare the authority to negotiate drug prices for the first time in its 60-year history. The administration estimates that the new prices could save Medicare $6 billion in 2026 alone, reducing costs by 22%. Additionally, Medicare enrollees are expected to save $1.5 billion in out-of-pocket expenses that same year.
Chiquita Brooks-LaSure, head of the Centers for Medicare and Medicaid Services (CMS), emphasized that the lower prices would have a profound impact on Americans’ lives, enabling them to afford vital medications. However, making direct comparisons between the newly negotiated prices and current prices is challenging due to confidential rebates already in place between Medicare Part D plans and drugmakers.
The negotiations reflect the administration’s ongoing efforts to address the rising costs of prescription drugs in the U.S., a long-standing concern for seniors who often struggle to afford their medications. Medicare covers around 66 million people, with over 50 million enrolled in Medicare Part D plans. These 10 drugs alone account for about 20% of total Medicare Part D spending, costing $50.5 billion in the 12 months leading up to May 2023. In 2022, 9 million seniors spent $3.4 billion out of pocket on these medications, with some paying over $6,000 annually for a single drug.
Pharmaceutical companies, which have fiercely opposed the negotiations, argue that the process undermines drug innovation and could result in fewer treatments for serious conditions. Several companies have filed lawsuits, claiming the price negotiations are unconstitutional. Despite these challenges, the Biden administration has pushed forward, emphasizing the long-term savings for both taxpayers and Medicare beneficiaries. Drugmakers face penalties if they refuse to participate in negotiations, including heavy excise taxes or the withdrawal of their products from Medicare and Medicaid markets.
Among the drugs subject to negotiation are blood thinners Eliquis and Xarelto, diabetes medications Jardiance and Farxiga, and autoimmune treatments like Enbrel and Stelara. These drugs have been on the market for at least seven years without competition from generic alternatives.
Looking ahead, CMS will continue the negotiation process, with plans to announce up to 15 more drugs for price negotiations by 2025, and eventually reaching 20 drugs per year by 2029. This effort is expected to yield billions of dollars in savings as Medicare gains more experience in negotiating drug prices. The negotiations are a key part of the administration’s broader strategy to reduce healthcare costs, with additional rounds planned for the coming years.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/08/15/medicare-releases-prices-for-first-10-drugs-subject-to-negotiations.html
