Washington, D.C.—Medicare is now allowed to negotiate prescription drug prices, and the U.S. Department of Health and Human Services (HHS) has selected the first 10 drugs for negotiations. All are very familiar to pharmacists, who fill millions of prescriptions for them each year.

The process is related to the Biden administration’s Inflation Reduction Act. The negotiations with participating drug companies will occur in 2023 and 2024, and any negotiated prices will become effective beginning in 2026.

Medicare enrollees taking the 10 drugs covered under Part D selected for negotiation paid a total of $3.4 billion in out-of-pocket costs in 2022 for these medications.

“For far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs. But 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,” said HHS Secretary Xavier Becerra, who said drug companies are attempting to block the negotiations.

Negotiating drug prices is not new for federal agencies. For example, as with many federal programs, the U.S. Department of Veterans Affairs (VA) has statutorily mandated access to favorable drug pricing. Because it also operates a national formulary, however, the agency can exclude medications that its formulary committee concludes are inappropriate for the patient population or should be subject to prior authorization. Because of that, the VA can negotiate deeper discounts, especially when there are generics available or multiple suppliers of medications to treat conditions.

In the case of Medicare, HHS says the negotiation process will consider the selected drug’s clinical benefit, the extent to which it fulfills an unmet medical need, and its impact on patients who rely on Medicare, among other considerations, such as costs associated with research and development as well as production and distribution for selected drugs.

The selected drug list for the first round of negotiations is:

• Eliquis
• Jardiance
• Xarelto
• Januvia
• Farxiga
• Entresto
• Enbrel
• Imbruvica
• Stelara
• Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill

Expenses for those drugs added up to $50.5 billion in total Part D gross–covered prescription drug costs, or about 20% of total Part D gross–covered prescription drug costs between June 1, 2022, and May 31, 2023, according to an HHS press release. The Centers for Medicare & Medicaid Services (CMS) said it will publish any agreed-upon negotiated prices for the selected drugs by September 1, 2024, with new prices going into effect beginning January 1, 2026.

“In future years, CMS will select for negotiation up to 15 more drugs covered under Part D for 2027, up to 15 more drugs for 2028 (including drugs covered under Part B and Part D), and up to 20 more drugs for each year after that, as outlined in the Inflation Reduction Act,” according to HHS.

Here is the total Part D gross–covered prescription drug costs of the medications from June 2022 to May 2023 and the number of Medicare Part D enrollees who used the medication during that period:

• Eliquis, for prevention and treatment of blood clots, $16,482,621,000 and 3.7 million users
• Jardiance for diabetes and heart failure, $7,057,707,000 and 1.6 million users
• Xarelto for prevention and treatment of blood clots and reduction of risk for patients with coronary or peripheral artery disease, $6,031,393,000 and 1.3 million users
• Januvia for diabetes, $4,087,081,000 and 869,000 users
• Farxiga for diabetes, heart failure, and chronic kidney disease, $3,268,329,000 and 799,000 users
• Entresto for heart failure, $2,884,877,000 and 587,000 users
• Enbrel for rheumatoid arthritis, psoriasis, and psoriatic arthritis, $2,791,105,000 and 48,000 users
• Imbruvica for blood cancers, $2,663,560,000 and 20,000 users
• Stelara for psoriasis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis, $2,638,929,000 and 22,000 users
• Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill for diabetes, $2,576,586,000 and 777,000 users.

The Inflation Reduction Act specified that CMS select drugs for the first round of negotiations by identifying potential qualifying single-source drugs, defined as those for which at least 7 years, or biologics for which at least 11 years, have elapsed between the FDA approval or licensure and the selected drug publication date and for which there is no generic or biosimilar competition. Excluded were certain orphan drugs, low-spend Medicare drugs, and plasma-derived products.

CMS determined the negotiation-eligible drugs—the 50 qualifying single-source drugs with the highest total Part D gross–covered prescription drug costs under Part D, except for small biotech drugs—and ranked them according to the highest total Part D gross–covered prescription drug costs.

Pharmaceutical companies with a selected drug for the negotiation program and the public will have an opportunity to submit data and information on the selected drugs to CMS no later than October 2, 2023.

This fall, CMS will invite each participating drug company with a selected drug to engage in a meeting on its data submission, while also holding public patient-focused listening session for each selected drug, which will occur between October 30, 2023, and November 15, 2023.

Then, based on the information gathered, CMS will send an initial offer for each selected drug for which the drug company is participating in the negotiation program, with CMS’ proposal for the maximum fair price and a concise justification no later than February 1, 2024. In developing an initial offer, CMS will consider evidence related to therapeutic alternatives as well as other factors, such as costs of research and development, production, and distribution of the selected drug.

Companies will have 30 days to respond to the initial offer by accepting the offer or providing a counteroffer, if desired. If an agreement on a maximum fair price is not reached through the initial offer or counteroffer, CMS will invite each participating drug company for up to three negotiation meetings later in 2024 before the negotiation period ends on August 1, 2024.

The content contained in this article is for informational purposes only. The content is not intended to be a substitute for professional advice. Reliance on any information provided in this article is solely at your own risk.

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