Updated August 29, 2023 at 8:05 AM ET
The Biden administration released its list of the first 10 drugs that Medicare will target for price cuts – reductions the government plans to achieve by negotiating the prices with drug makers.
People on Medicare who took the 10 drugs paid a total of $3.4 billion in out-of-pocket costs for them in 2022, according to the government. The cost to Medicare was much higher — about $50 billion in total.
The list includes Eliquis, a drug sold by Bristol Myers Squibb to prevent blood clots used by more than 3.7 million people on Medicare in the year ending May 2023 at a cost of $16.4 billion to the program, and Xarelto, another blood thinner sold by Johnson & Johnson used by more than 1.3 million people on Medicare at a cost to the program of more than $6 billion.
Diabetes drugs Jardiance, Januvia, Farxiga and Fiasp/Novolog insulin are on the list, as are Enbrel and Stelara, drugs used to treat autoimmune diseases like rheumatoid arthritis, psoriasis and Crohn's disease. Imbruvica, a drug that treats blood cancers, is also on the list.
The power to negotiate the prices comes from the Inflation Reduction Act passed last year. The actual negotiations will occur during the next two years, with prices announced by Sept. 1, 2024. But the lower prices for the drugs won't begin until 2026.
Drugmakers are fighting the new law in the courts
President Biden is expected to make the price negotiations part of his stump speech as he campaigns for reelection in 2024. "There is no reason why Americans should be forced to pay more than any developed nation for life-saving prescriptions just to pad Big Pharma's pockets," Biden said in a statement on Tuesday.
Drug makers have said the new provisions are unconstitutional and have filed a series of lawsuits to try to stop them.
"This is going to be a a heavyweight battle," said Ameet Sarpatwari, an assistant professor at Harvard Medical School.
Lobby group Pharmaceutical Research and Manufacturers of America (PhRMA) said the change gives the government too much power and would hurt the innovation and investment needed for Biden administration's push to end cancer. "Today's announcement is the result of a rushed process focused on short-term political gain rather than what is best for patients," PhRMA CEO Stephen Ubl said in a statement.
Average prices for prescription drugs in the United States are much higher than in other parts of the world. While other countries have determined methods for setting prices for drugs, the U.S. government is starting from scratch.
"That includes a lot of back and forth with the drug companies about things like their research and development costs and the cost of manufacturing the drugs," as well as federal investments in research that helped develop the drugs, said Stacie Dusetzina of Vanderbilt University's School of Medicine.
The law allows for more prices to be negotiated for 2027 and subsequent years.
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