The U.S. Department of Health and Human Services (HHS) has unveiled the inaugural list of 10 prescription medications that will undergo Medicare price negotiations, marking a historic shift in pharmaceutical pricing policy. The selected drugs, which span treatments for diabetes, heart failure, cancer, and immunological disorders, represent approximately 20% of Medicare Part D's gross covered prescription drug costs.
The landmark selection includes widely-prescribed medications such as Bristol-Myers Squibb and Pfizer's blood thinner Eliquis, Novartis's heart failure treatment Entresto, and Johnson & Johnson's immunology drug Stelara. These medications generated $3.4 billion in out-of-pocket costs for Medicare beneficiaries in 2022 alone.
Selected Medications and Their Impact
The chosen drugs demonstrate the government's focus on high-impact medications that significantly affect Medicare spending. Johnson & Johnson emerges as particularly affected, with three major products selected:
- Imbruvica for blood cancers (co-marketed with AbbVie)
- Stelara for immunological conditions
- Xarelto for blood clot prevention
Other significant selections include diabetes medications such as Merck's Januvia, Eli Lilly/Boehringer Ingelheim's Jardiance, and Novo Nordisk's Novolog/Fiasp insulin products. AstraZeneca's Farxiga and Amgen's Enbrel round out the list of targeted therapies.
Implementation Timeline and Industry Response
The negotiation process, mandated by the Biden administration's Inflation Reduction Act (IRA), will culminate in the announcement of new prices on September 1, 2024, with implementation scheduled for January 1, 2026. However, the path forward faces significant legal challenges.
Multiple pharmaceutical companies and industry organizations have filed lawsuits contesting the program's constitutionality. AstraZeneca, Merck & Co., Bristol-Myers Squibb, and others argue that the process violates multiple Constitutional amendments and represents government-mandated price setting rather than true negotiation.
Expanding Scope of Negotiations
The program's reach is set to expand significantly in coming years. CMS plans to select up to 15 additional Part D drugs for 2027, another 15 drugs (including both Part B and D) for 2028, and up to 20 more drugs annually thereafter.
HHS Secretary Xavier Becerra defended the initiative, stating, "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."
However, PhRMA President Stephen Ubl criticized the selection process as "rushed" and politically motivated, arguing that many selected medicines already offer significant rebates through existing Part D program negotiations. He emphasized that "Politics should not dictate which treatments and cures are worth developing and who should get access to them."
