Fifteen additional drugs that are covered under Medicare Part D have been selected for price negotiations by the Department of Health and Human Services, the government agency said today.
The negotiations with participating drug companies for these 15 drugs will take place later this year, and any negotiated prices would become effective in 2027. According to HHS, the selected drugs accounted for about $41 billion in total gross covered prescription drug costs under Medicare Part D, or about 14%, between November 2023 and October 2024.
When combined with the total gross covered prescription drug costs under Medicare Part D of the 10 drugs selected for the first cycle of negotiations over that same time period, this represents over a third of total gross covered prescription drug costs under Medicare Part D, said HHS.
The drugs selected for the second round of negotiations are Ozempic/Rybelsus/Wegovy, Trelegy Ellipta, Xtandi, Pomalyst, Ibrance, Ofev, Linzess, Calquence, Austedo/Austedo XR, Bre Ellipta, Tradjenta, Xifaxan, Vraylar, Janumet/Janumet XR and Otezla.
In accordance with the final guidance for the second cycle of the Drug Price Negotiation Program, drug companies with a selected drug will have until Feb. 28 to decide if they will participate in negotiations. In negotiating with participating manufacturers, the Centers for Medicare and Medicaid Services said it will consider the selected drug's clinical benefit, the extent to which it addresses unmet medical needs, and its impact on specific populations, including people who rely on Medicare. Other considerations include costs associated with research and development as well as production and distribution for the selected drugs.
The Inflation Reduction Act gives the federal government the authority to negotiate the prices of certain prescription drugs.
WHAT'S THE IMPACT
The announcement garnered negative reaction from the Pharmaceutical Research and Manufacturers of America, with PhRMA President and CEO Stephen J. Ubl calling the price negotiation prices outlined in the IRA "dangerous," and liable to stifle innovation and create costly bureaucracy.
"Over half the medicines selected for price setting by the Biden administration are being targeted because of the 'pill penalty' included in the IRA, which lets the government set the price of medicines that often come in pill form much earlier than other types of medicines," said Ubl. "The pill penalty sends a clear message to innovators to stop developing these medicines even though they may be the most effective, convenient, and lowest cost option for patients.
"Medicare patients are facing higher costs, fewer plan options and more access barriers because the IRA failed to rein in abusive practices from PBMs and insurers, which are the real drivers of high out-of-pocket costs for seniors," he said.
HHS' announcement was greeted more favorably by the American Association of Retired Persons (AARP), which released data from December showing that older Americans support CMS' ability to negotiate drug prices.
According to the AARP research, 85% of adults 50 or older believe it's important for Congress and the administration to protect Medicare's ability to negotiate lower drug prices, and 75% believe it should be a federal priority.
"For too long, big drug companies have padded their profits by setting outrageous prices at the expense of American lives, forcing seniors to skip prescriptions they can't afford," said AARP Executive Vice President and Chief Advocacy and Engagement Officer Nancy LeaMond. "The first round of Medicare drug price negotiation made it clear that this process will reduce the prices of these important products and create billions of dollars in savings for Medicare and its beneficiaries. With Medicare negotiating to lower prices on more drugs and the new out-of-pocket cap, seniors are finally starting to see relief from high drug prices."
The move also received support from Democratic lawmakers, including Ways and Means Committee Ranking Member Richard E. Neal, D-MA, who said the drug negotiations are lowering costs and improving care.
"When Ways and Means Democrats delivered the landmark Inflation Reduction Act, we did so to put an end to seniors having to ration or forgo medicine and finally put their needs ahead of Big Pharma's profits," said Neal. "Now, the 25 drugs that Medicare negotiates lower prices on represent a third of the Medicare Part D spending. This is outstanding progress in just two short years. From breast cancer to diabetes to asthma, millions of seniors are benefitting from these slashed prices and more money back in their pockets."
Senate Finance Committee Ranking Member Ron Wyden, D-OR, also praised federal efforts to lower drug prices.
"Today's announcement is welcome news, and a timely reminder of which party is working to bring down costs for American seniors and families, especially for drugs that help them conquer cancer, heart disease, obesity and more," said Wyden. "It is now up to Donald Trump to follow through on these negotiations and prove he's on the side of American seniors and families, not Big Pharma."
THE LARGER TREND
Republicans have filed a bill to completely repeal the Inflation Reduction Act of 2022, according to the Pennsylvania Independent, but the,GOP wants to target the clean energy infrastructure in the IRA.
The Trump administration could go in one of three directions with the Medicare negotiations program in the bill, according to KFF: stay the course, water it down or repeal it all together.. KFF said its latest poll finds bipartisan support for expanding the number of drugs to be negotiated by the federal government, and weak support for any effort to repeal the Medicare negotiations program.
In the first cycle of negotiations, Medicare negotiated with participating drug manufacturers and reached agreement on new, lower prices for 10 drugs. Those prices will become effective starting Jan. 1, 2026.
If the new prices had been in effect in 2023, HHS said they would have saved an estimated $6 billion in net covered prescription drug costs, or approximately 22%, across the 10 selected drugs. The new, lower prices range from 38% to 79% discounts off list prices.
In 2026, people with Medicare prescription drug coverage are expected to see aggregated estimated savings of $1.5 billion in their personal out-of-pocket costs.
CMS said that in future years, it will select an additional 15 drugs to negotiate, including drugs covered under Parts B and D, and up to 20 more drugs for each cycle after that.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.