Biden Administration to Announce First Batch of Drugs for Medicare Negotiation
The Biden administration is set to unveil the first 10 drugs that will be subject to negotiation in Medicare, as part of a controversial program authorized by the Inflation Reduction Act last year. The move, which aims to lower drug prices, has been met with resistance from the drug industry, resulting in several lawsuits declaring the program unconstitutional.
Despite the legal challenges, the Centers for Medicare and Medicaid Services (CMS) has proceeded with its plans. The White House is even organizing public events to coincide with the announcement, which is scheduled just a few days before the September 1 deadline for the list’s release.
While there has been speculation about which drugs would be included in the initial round of negotiations, industry experts and drugmakers themselves have made predictions. Medications such as Eliquis, manufactured by Bristol Myers Squibb, and Januvia, a diabetes drug made by Merck, are among those expected to be on the list. Other drugs mentioned include Xarelto, a blood thinner, Imbruvica, a cancer treatment, and Ozempic, a widely-used medication for diabetes and weight loss.
The selection process for the initial set of drugs will be based on multiple factors, including the drugs’ clinical benefits, price comparisons to alternatives, research and development costs, and patent protection.
Drugmakers will have a month to decide whether they will participate in the negotiation process. Following that, CMS and the manufacturers will engage in negotiations, and the agency will publish the agreed-upon maximum fair prices by September 1, 2024. However, these prices will not take effect until 2026.
To encourage compliance, drugmakers who refuse to participate will face penalties, including an excise tax of up to 95% of the medications’ US sales or the option to withdraw their products from the Medicare and Medicaid markets. The pharmaceutical industry argues that the true penalty could be as high as 1,900% of sales.
The program will continue beyond the first batch of negotiations, with the Health and Human Services secretary being able to negotiate another 15 drugs for 2027, and an increasing number of drugs each year thereafter. Only medications that have been on the market for several years without competition will be eligible.
Initially, the negotiation process will focus on Part D drugs purchased at pharmacies. Part B drugs, which are administered by doctors, will be included starting in 2028.
The Congressional Budget Office estimates that the program will save Medicare $98.5 billion over the next decade.
The pharmaceutical industry, however, is actively attempting to halt the negotiation process. Multiple lawsuits have been filed by manufacturers, who claim that the program is unconstitutional and will impede innovation and access to new drugs.
Arguments against the program include claims of violations of the Fifth Amendment’s “takings” clause, as Medicare can obtain patented drugs from manufacturers without fair compensation. Challengers also argue that the negotiation process violates the First Amendment by forcing manufacturers to agree to government-dictated prices. Additionally, they claim that the process levies excessive fines in violation of the Eighth Amendment.
The Biden administration maintains that negotiating drug prices is not unconstitutional, and legal experts tend to agree. Secretary of Health and Human Services Xavier Becerra stated in June that the administration remains committed to delivering lower drug costs for Americans and will not be deterred by the resistance from pharmaceutical companies.
As the Biden administration prepares to reveal the first group of drugs for negotiation, the controversial program’s future hangs in the balance as legal battles continue to unfold.