2023-08-29 17:17:00
(CNN) — The Joe Biden government released this Tuesday the names of the first 10 drugs subject to price negotiations in Medicare, including anticoagulants and diabetes medicines.
These drugs are: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Fiasp, and some other insulins made by Novo Nordisk, including NovoLog.
These drugs are used to treat heart disease, certain types of cancer, diabetes, and autoimmune diseases. Some 9 million Medicare enrollees took the drugs on the list and paid a total of $3.4 billion out-of-pocket last year, according to the US Department of Health and Human Services (HHS). Those who did not receive additional financial aid shelled out up to US$6,500 on average.
Once set, the negotiated prices will take effect in 2026, although the pharmaceutical industry has filed several lawsuits to prevent this.
According to HHS, these drugs accounted for $50.5 billion, or about 20% of total covered gross costs for Part D prescription drugs, between June 1, 2022 and May 31, 2023, which is the period used to determine which drugs were eligible for negotiation.
A new historic power under attack
The controversial program was authorized by the Inflation Reduction Law that Democrats pushed through Congress last year. However, the pharmaceutical industry and his supporters are determined to strike it down, filing at least eight lawsuits in recent weeks to declare it unconstitutional.
Undeterred, the Centers for Medicare & Medicaid Services (CMS) they have moved on with his new historic power, which Democrats have long argued is a way to lower drug prices.
President Biden is scheduled to speak about the initiative on Tuesday afternoon, along with his other efforts to reduce health care costs. The Inflation Reduction Act also limits the monthly cost of insulin to US$35 for Medicare enrollees, it allows seniors to get more vaccines for free and penalizes drug makers who raise prices above inflation. Other provisions will come into force in the coming years.
What will happen next?
The initial set of drugs was chosen from the 50 highest-spending Part D drugs in total in Medicare. Only drugs that have been on the market for several years without competition are eligible.
CMS will consider multiple factors when developing its initial offer, including the clinical benefits of drugs, the price of alternatives, research and development costs, and patent protection, among others. Discounts will range from 25% to 60% of the manufacturer’s non-federal average price, depending on the drug’s approval date.
Manufacturers have one month to decide whether to participate. CMS and manufacturers will then negotiate, and the agency will publish the agreed fair maximum prices by September 1, 2024.
If the manufacturers do not comply with the process, they will have to pay a special tax of up to 95% of the sales of the drugs in the US or withdraw all their products from the Medicare and Medicaid markets. The pharmaceutical industry maintains that the real sanction can reach 1,900% of sales.
After the initial round, the secretary of Health and Human Services can negotiate another 15 drugs for 2027 and again for 2028. The number rises to 20 drugs a year for 2029 and beyond.
In the first two years of negotiations, CMS will select only Part D drugs that are purchased at pharmacies. Part B drugs, which are administered by doctors, will be added in 2028.
Projected savings of almost US$100 billion
According to the Congressional Budget Office, the program is expected to save Medicare $98.5 billion over 10 years.
The extent of the savings remains to be seen, as the pharmaceutical industry argues that many of the drugs on the list are already heavily discounted and rebated due to ongoing negotiations in Part D insurance plans.
But some experts say the new power of Medicare will make a difference.
“It’s pretty obvious that big savings can be achieved, even for a small number of drugs,” said Dr. Benjamin Rome, a Health Policy Research Fellow at Brigham and Women’s Hospital and Harvard Medical School.
Although he said it’s more difficult to pinpoint the extent of the savings for Medicare enrollees taking the drugs on the list, Rome noted that the overall savings can help reduce premiums and the amount of taxpayer support needed for Medicare.
Patient advocates also welcomed the publication of the list.
“The number one reason seniors skip or ration their prescriptions is that they can’t afford them. This needs to stop,” said Nancy LeaMond, AARP’s director of Advocacy and Engagement. “Allow Medicare to negotiate prices on these top 10 drugs “It will finally bring much-needed access and relief to American families, particularly seniors. We cannot overemphasize how monumental this bill is to the financial stability and overall health of older Americans.”
Court challenges of manufacturers
The manufacturers, however, hope to stall the bargaining process, filing multiple lawsuits in federal courts across the United States. Each of them maintains that the program is unconstitutional in various respects.
Many of the drugs on the list are made by pharmaceutical companies that have sued the government. Among them are: Eliquis, a blood thinner manufactured by Bristol Myers Squibb; Januvia, a diabetes drug made by Merck; Imbruvica, a leukemia drug made by Janssen Pharmaceuticals, owned by Johnson & Johnson; Xarelto, a blood thinner marketed in the US by Janssen; Stelara, a Janssen drug used for Crohn’s disease and other conditions; Jardiance, a diabetes drug made by Boehringer Ingelheim; and Farxiga, a diabetes drug made by AstraZeneca. Some of the drugs were co-developed by other pharmaceutical companies that have not filed lawsuits.
Among the arguments put forward is that the program violates the “taking” clause of the Fifth Amendment because it allows Medicare to obtain patented drugs from privately owned manufacturers without paying fair market value under the threat of severe penalties.
In addition, the bargaining process violates the First Amendment, the plaintiffs say, because it coerces manufacturers into saying they agree to the government-mandated price and that it is fair.
Another argument is that the process violates the Eighth Amendment by imposing an excessive fine if drugmakers refuse to bargain and continue to sell their products to the Medicare marketplace.
PhRMA, the main lobby group for the pharmaceutical industry, said Tuesday’s announcement “is the result of a rushed process focused on short-term political gain and not what’s best for patients.”
“Giving a single government agency the power to arbitrarily set drug prices with little accountability, oversight or input from patients and their doctors will have significant negative consequences long after this government is gone,” the group said in a statement. statement, adding that the White House Cancer Moonshot, an important initiative for Biden, will be hampered by the damage done to innovation.
In a blog post published last week, PhRMA argued that seniors may not benefit from and may be restricted from accessing their medications by their Part D drug insurance plans. It also claimed that the program ignores the need for that older people have access to their medicines. In addition, he said that the program ignores the current savings from bargaining and competition that exists in the Part D benefit. And lastly, that the program will hurt innovation and reduce research and investment in the future drug development.
The CBO estimates that only about 15 fewer drugs would be introduced in the next 30 years, but the pharmaceutical industry argues that the actual number would be much higher.
The US Chamber of Commerce, which also filed a lawsuit and seeks an injunction to stop the process, called the White House celebration “premature.”
“The plan that they are implementing is under a significant cloud of legal uncertainty,” said Neil Bradley, House Policy Director. the Law of Administrative Procedures”.
The Biden government, however, has said that nothing in the Constitution prevents it from negotiating drug prices. In general, lawyers agree.
“The Biden-Harris administration is not going to let anything get in the way of lowering drug costs for Americans,” Health and Human Services Secretary Xavier Becerra said in June. “Pharmaceutical companies have made record profits for decades. Now they line up to block the work of this government to negotiate better drug prices for our families. We will not be deterred.”
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