Medicare Drug Pricing

The Biden administration yesterday announced 10 drugs subject to Medicare price negotiations in an effort to lower government spending on prescription medications. The initiative is part of last year’s Inflation Reduction Act, which allows Medicare to negotiate prices for 60 drugs under Medicare Parts B and D.

The drugs, responsible for $3.4B in out-of-pocket expenses for seniors in the past year, were chosen due to their high Medicare spending and lack of market alternatives. They include Eliquis and Xarelto (blood thinners); Jardiance, Januvia, and Fiasp/NovoLog (diabetes); Farxiga (diabetes and chronic kidney disease); Entresto (heart failure); Enbrel (rheumatoid arthritis); Imbruvica (blood cancer); and Stelara (inflammation). Together, they accounted for 20% (or $50.5B) of Part D spending between June 1, 2022, and May 31.

Several drug manufacturers have filed lawsuits challenging the law; the makers of the drugs have 30 days to agree to participate or face potential tax penalties. Negotiations over the 10 drugs will occur over approximately a year, with finalized prices expected to be announced in the fall of 2024 and go into effect in 2026