U.S. President Joe Biden speaks about prescription drug costs during an event at NHTI Concord Community College in Concord, New Hampshire, U.S., October 22, 2024. REUTERS/Elizabeth Frantz
Elizabeth Frantz | Reuters
The Biden administration on Friday unveiled the next 15 prescription drugs that will be subject to the price negotiations between the manufacturer and Medicare, starting the second phase a significant process whose aim is to make expensive medicines more affordable for the elderly.
They are at the top of the list Novo Nordiskthe successful diabetes injection Ozempic, the weight loss injection Wegovy and the diabetes tablet Rybelsus, which are considered as one product in the negotiations since they all share the same active ingredient: semaglutide. These treatments fueled the rise of a red-hot obesity market, and have been difficult for patients to access due to cost, insurance and supply constraints.
The agreed prices for the second wave of drugs should come into force in 2027.
These are the 15 drugs that are the subject of initial discussions this year:
- Semaglutide (Ozempic, Wegovy, Rybelsus,) manufactured by Novo Nordisk, is used for type 2 diabetes, weight management, and cardiovascular health
- Trelegy Ellipta, manufactured by GSK, is an inhaler used for chronic obstructive pulmonary disease and asthma
- Xtandi, manufactured by Pfizer, is used to treat prostate cancer in men
- Pomalyst, made by Bristol Myers Squibb, is used to treat a blood cancer called multiple myeloma and a cancer that develops in people with HIV
- Ibrance, manufactured by Pfizer, is used to treat certain types of breast cancer
- Ofev, manufactured by Boehringer Ingleheim, is used to treat chronic lung diseases in adults.
- Linzess, manufactured by AbbVie and Ironwood Pharmaceuticals, is used to treat irritable bowel syndrome and chronic constipation
- Calquence, manufactured by AstraZeneca, is used to treat certain types of blood cancer
- Austedo, Austedo XR, manufactured by Teva Pharmaceuticals, is used to treat involuntary movements caused by tardive dyskinesia or Huntington’s disease
- Breo Ellipta, manufactured by GSK and Theravance, is an inhaler used to treat chronic obstructive pulmonary disease
- Tradjenta, manufactured by Boehringer Ingelheim and Eli Lilly, is used to treat type 2 diabetes
- Xifaxan, manufactured by Salix Pharmaceuticals, is used to treat diarrhea caused by travel or irritable bowel syndrome
- Vraylar, made by AbbVie, is used to treat schizophrenia, bipolar I disorder, and major depressive disorder.
- Janumet, Janumet XR, manufactured by Merck, is used to treat type 2 diabetes
- Otezla, manufactured by Amgen, is used to treat plaque psoriasis, psoriatic arthritis and oral ulcers
President Joe Biden’s Inflation Reduction Act gave Medicare the power to negotiate drug prices directly with manufacturers for the first time in the federal program’s nearly 60-year history. Some congressional Democrats and consumer advocates have long pushed for the change, as many seniors across the country struggle to afford care.
About 5.3 million people with Medicare Part D coverage used 15 second-round drugs to treat various conditions, such as asthma, cancer and type 2 diabetes, between Nov. 1, 2023, and Oct. 31, 2024, according to a Department of Health statement and community services on Friday. The drug group also accounted for roughly $41 billion, or 14%, of total Part D prescription drug spending during that time period, the release added.
Combined with the 10 drugs selected for the first round of negotiations, the 25 products represent 36% of all Medicare Part D prescription drug costs during that time period, according to the release.
Medicines have been on the market for at least seven years without generic competition, or 11 years in the case of biological products such as vaccines.
Medicare has already completed negotiations for the first 10 drugs selected in the program, and the new prices are set to take effect next year. In August, the Biden administration said it expected those negotiated prices to save Medicare beneficiaries 1.5 billion dollars in out-of-pocket costs in 2026 alone. The government also expects the prices to lead to about $6 billion in net savings for the Medicare program in 2026that is, a total of 22% net savings.
But it’s unclear whether President-elect Donald Trump might try to change or reduce some of the law’s provisions when he takes office next week.
The negotiation program has also faced a series of – so far unsuccessful – legal challenges from the pharmaceutical industry, which sees the process as a threat to its revenue growth, profits and drug innovation.
Medicare covers approximately 66 million people in the US, and 50.5 million patients are currently enrolled in Part D plans, according to the health policy research organization KFF.
Nearly 10% of Medicare enrollees age 65 and older and 20% of those under 65 reported challenges affording drugs, a senior administration official told reporters last year.
“Last year, we proved that negotiating lower drug prices works. Now we plan to continue on that
record by negotiating lower prices for 15 additional important drugs for seniors,” HHS Secretary Xavier Becerra said in a statement. “Today’s announcement is crucial – the Inflation Reduction Act lowers prices for people with Medicare. HHS will continue to negotiate in the best interests of people with Medicare so they have access to innovative, life-saving treatments at lower prices.”
Patient advocacy groups, such as the nonprofit AARP, welcomed Friday’s announcement.
“For too long, big pharmaceutical companies have strained their profits by setting outrageous prices at the expense of American lives, forcing seniors to skip prescriptions they can’t afford,” AARP said in a statement. “The first round of Medicare drug price negotiations made it clear that this process will lower the prices of these important products and create billions of dollars in savings for Medicare and its beneficiaries.”
What’s Next in Medicare Price Negotiations?
Drug manufacturers will have until February 28 to decide whether to participate in the program. If a drugmaker refuses to negotiate, it must either pay an excise tax on up to 95% of its drug sales in the US or pull all of its products from the Medicare and Medicaid market.
Those who participate will participate in a lengthy negotiation process that includes months of price quotes with Medicare. The federal program determines its initial bid for each drug using data on sales volume, the level of federal financial support for the drug’s development, and data on pending or approved patent applications and exclusivity, among other information.
After the second round ends, Medicare can negotiate prices for 15 more drugs starting in 2028. The number increases to 20 negotiated drugs a year starting in 2029.
The government will select only Medicare Part D drugs for the first two rounds of negotiations. It will add more specialty drugs covered by Medicare Part B, usually prescribed by doctors, in 2028.
But drugmakers will have more opportunities to negotiate with Medicare, based on final guidance announced last year for the second round of price negotiations. The first non-binding negotiation meetings will be held after Medicare makes its initial price offers for the 15 drugs it must present June 1.
