TL/DR –
The Centers for Medicare & Medicaid Services initiated price offer negotiations for the first 10 drugs selected under the Medicare drug price negotiating program. The objective of the negotiations is to establish a “maximum fair price” for drugs produced by companies like Johnson & Johnson, Merck, Bristol Myers Squibb, Eli Lilly, and AstraZeneca; the new pricing is expected to be implemented in 2026. However, the pharmaceutical industry is opposing the measure, with PhRMA arguing that such negotiations could have long-term consequences for patients, and several companies have filed lawsuits challenging the constitutionality of the program.
Medicare Begins Drug Price Negotiation Program
Medicare’s drug price negotiation operation has officially commenced. The Centers for Medicare & Medicaid Services (CMS) recently conveyed initial price proposals for the chosen ten drugs, including products from Johnson & Johnson, Merck, Bristol Myers Squibb, Eli Lilly, and AstraZeneca. The ensuing months will witness negotiations between the federal government and these pharmaceutical companies, concluding on August 1.
The objective of these discussions is to establish a “maximum fair price” as defined by the Inflation Reduction Act. These revised prices are set to be effective from 2026. Health and Human Services Secretary Xavier Becerra announced this as another stride towards fair prescription drug pricing for Medicare beneficiaries.
However, the White House and drug manufacturers have kept the initial offers undisclosed as of early February. The start roster of drugs includes J&J’s Xarelto, Merck’s Januvia, AstraZeneca’s Farxiga, and Novartis’ Entresto, anticipated for a price reduction between 25% and 60%.
PhRMA, a lobbying group, opposed this move, indicating that it would have implications for patients beyond this administration. They contend that government officials are setting medicine prices behind closed doors without sharing the pricing methodology or patient and provider involvement.
Companies whose drugs are on the initial list have sued the federal government since the enactment of the Inflation Reduction Act in 2022, attempting to nullify the program. According to Georgetown University O’Neill Institute’s health care litigation tracker, ten lawsuits, including ones from Novo Nordisk, Novartis, and Merck, have been filed.
In response to AstraZeneca’s argument that the negotiation provision infringes property rights, a federal judge recently expressed skepticism, suggesting that not all such claims may favor the pharma companies.
The administration has also announced the launch of LowerDrugCosts.gov, a patient-friendly resource hub providing information on affordable drugs for Medicare beneficiaries.
This is one part of a larger effort to emphasize the administration’s commitment towards drug pricing reform ahead of the 2024 elections. CMS administrator Chiquita Brooks-LaSure affirmed the agency’s dedication to affordable drug access for Medicare beneficiaries, especially for the first ten chosen drugs.
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