US Government Releases Historic List of Pharma Giants for Medicare Price Negotiations
Major pharmaceutical companies are facing a historic moment as the US government reveals its list of ten drugs selected for Medicare drug price negotiation under the Inflation Reduction Act (IRA). With the goal of curbing inflation and lowering prescription drug prices, the landmark federal law aims to save $25 billion in drug cost savings for the US government.
The list includes pharma giants such as Eli Lilly, Johnson & Johnson, and Bristol Myers Squibb. These companies will be required to enter price negotiations with the Centers for Medicare & Medicaid Services (CMS) by October 1, 2023, or else they may face steep tax penalties or even risk losing Medicare and Medicaid coverage entirely.
To determine the initial maximum fair price, pharma companies will have to provide confidential information on new data points including R&D costs, federal financial support, revenue, and sales volume. The CMS will then have until February 1, 2024, to submit an initial offer with justifications, to which the affected companies will have 30 days to respond. The final negotiated price will be published on September 1, 2024, and will take effect on January 1, 2026.
Pharma analyst Cyrus Fan states that the selected list of drugs primarily consists of medicines on which Medicare spends the most. The negotiations have the potential to benefit Medicare beneficiaries by reducing out-of-pocket spending and increasing therapy compliance.
However, the pharmaceutical industry and industry advocates have expressed negative reactions to the list. Some companies argue that many of the selected drugs already have significant rebates and discounts, and the Medicare drug price negotiation program is beginning to impact research and development.
Despite the industry’s opposition, the Biden Administration remains confident in its ability to prevail in the multiple lawsuits filed against the Inflation Reduction Act. It believes that the law is on its side and anticipates possible cases heading to the US Supreme Court for judgment.
The announcement has also disappointed the Biosimilars Forum, particularly regarding the inclusion of two drugs, Enbrel and Stelara, which have soon-to-arrive biosimilar competitors. The Biosimilars Forum emphasizes that a competitive biosimilars market can save patients and the US healthcare system $133 billion over the next three years.
As the pharma industry and the government continue to clash over Medicare price negotiations, further lawsuits may arise in the future. The outcome of these cases will have significant implications for the future of drug pricing in the US.
In conclusion, the release of the historic list of pharma giants facing Medicare price negotiations marks a pivotal moment in the US government’s efforts to rein in the country’s expensive drug prices. This development is expected to have a lasting impact on the pharmaceutical industry, patient access to new therapies, and the future of healthcare affordability in the United States.
