TL/DR –
The US government has announced a list of 15 new drugs targeted for Medicare price negotiations for 2028 under the Inflation Reduction Act of 2022. The list includes Gilead Sciences’ HIV drug Biktarvy, Pfizer’s arthritis treatment Xeljanz, and Eli Lilly’s diabetes drug Trulicity. Despite industry opposition and lawsuits, the first round of negotiated prices on 10 drugs were implemented this year, with potential to save the Medicare program 36% on these medications or about $8.5 billion based on the prices negotiated for 2027.
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Medicare Price Negotiations to Include 15 More Drugs in 2028
On Tuesday, the U.S. government announced that 15 new medications, including Gilead Sciences’ HIV drug Biktarvy and Pfizer’s arthritis treatment Xeljanz, have been targeted for Medicare price negotiations in 2028. This move is part of the third phase of the Inflation Reduction Act of 2022, legislated by former President Joe Biden, to regulate drug prices procured by the U.S. Medicare health program for the elderly (65 years and above) and those with disabilities.
Negotiations Continue Despite Industry Resistance
Despite the pharmaceutical industry’s continued opposition to this law and the multiple unsuccessful lawsuits it has spawned, the first round of negotiated prices for ten pharmacy-sold drugs was implemented this year. The 2028 list expands to include products administered in doctors’ offices or hospitals, such as AbbVie’s Botox and Novartis’ psoriasis medication, Cosentyx. Eli Lilly’s GLP-1 diabetes medication, Trulicity is also on the list.
BMO Capital Markets analyst Evan Seigerman commented, “With prior rounds of pricing negotiations reasonable, and several of these medicines set to lose exclusivity in the near-term, we continue to expect that the impacts will be manageable.”
Projected Savings and Share Prices
Last year, the U.S. Medicare health plan had projected its negotiated prices for 15 drugs, effective from 2027, would save the program 36% on those medications compared to recent annual spending. This amounts to approximately $8.5 billion in savings. Following this announcement, shares of Gilead, Lilly, AbbVie, Johnson & Johnson, Pfizer, and Bristol Myers all rose nearly 2% in after-hours trading.
Gilead’s HIV treatment, Biktarvy, with 2024 sales recorded at $13.4 billion, had been anticipated to be on the negotiation list. The company announced in October that it had reached settlements with three generic manufacturers, extending the drug’s U.S. patent coverage to April 2036. JP Morgan noted in a research update, “While we expect Biktarvy will likely be eligible for IRA price negotiations beginning in 2028, only a low-20% of US sales are expected to be exposed.”
Criteria and Continued Contests
The U.S. Centers for Medicaid and Medicare Services revealed that the selected drugs accounted for $27 billion in spending in the year ending October 31, 2025. The drugs were chosen based on them being either seven or 11 years out from being approved by the U.S. Food and Drug Administration and having no generic or biosimilar alternative available.
Despite these initiatives, pharmaceutical companies continue to challenge the legislation in court. Elizabeth Carpenter, head of policy and research at the trade group PhRMA, argued, “The IRA continues to show why government price setting is the wrong approach for Americans. Since the law took effect, seniors have faced higher costs, fewer choices and more barriers to care.”
Novartis, in response, mentioned that its two drugs, Cosentyx for inflammatory diseases and Kisqali for breast cancer, provide significant value to patients and that the law enabling negotiation will have lasting implications for patients.
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