Lower Drug Prices Announced Under Medicare Negotiation Program

CMS today announced the agreed-upon lower prices for all 10 drugs selected for price negotiations under the Inflation Reduction Act (IRA).¹ These drugs are considered some of the most expensive and frequently dispensed throughout the Medicare program. According to CMS, the negotiated prices will allow Medicare patients with conditions like heart disease, diabetes, and cancer to access their medications more cost-effectively.

In 2023, CMS announced the list of drugs that were up for Medicare price negotiations under the IRA.² President Joe Biden signed the IRA into law in August 2022 with stated goals of improving Medicare expanding benefits, lowering drug costs, and improving the sustainability of the Medicare program for future generations.³

The following 10 drugs were included,² and their percentage discount of the negotiated price from the 2023 list price is as follows³:

• Apixaban (Eliquis): 56%
• Empagliflozin (Jardiance): 66%
• Rivaroxaban (Xarelto): 62%
• Sitagliptin (Januvia): 79%
• Dapagliflozin (Farxiga): 68%
• Sacubitril/valsartan (Entresto): 53%
• Etanercept (Enbrel): 67%
• Ibrutinib (Imbruvica): 38%
• Ustekinumab (Stelara): 66%
• Insulin aspart (Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill): 76%

Medicare Drug Price Negotiation Program | CMS.

Previously, these medications accounted for $56.2 billion in total Part D gross covered prescription costs or about 20% of total Part D gross covered prescription costs.³ Patients were spending nearly $18.9 billion in out-of-pocket drug costs for all drugs covered under Part D, including $3.9 billion in out-of-pocket costs for drugs selected for negotiation.

Prices nearly doubled from 2018 to 2022 when costs went from $20 billion to about $46 billion, a 134% overall increase.¹ A report from the Office of the Assistant Secretary for Planning and Evaluation (ASPE) released price trends of the 10 drugs throughout the first cycle of the negotiation program. Data showed that list prices increased 55% from 2018 to 2023.

“Americans pay too much for their prescription drugs. That makes today’s announcement historic. For the first time ever, Medicare negotiated directly with drug companies and the American people are better off for it,” said HHS Secretary Xavier Becerra.¹

CMS initiated negotiations by proposing original prices to selected drug companies in early 2024.³ Companies responded with counteroffers. Following negotiation meetings this spring, agreements were reached for some drugs. CMS issued final offers to remaining companies in July, with a response deadline at the end of the month. The negotiation period concluded on August 1, resulting in agreed prices for all 10 drugs.

Negotiated prices will go into effect by 2026 for patients enrolled in Medicare prescription drug coverage.³ An estimated $1.5 billion in savings is expected under the standard benefit design. Savings from the negotiation program come in addition to other cost savings from the IRA, including the first cap on out-of-pocket drug costs for Medicare beneficiaries.

By February 2025, CMS will select up to 15 additional drugs covered under Part D for negotiation projected for 2027.¹ In 2028, CMS will select another 15 drugs covered by Part B or Part D and another 20 drugs the following year, required by the IRA.

Despite these mandated negotiations, some experts are curious as to how certain negotiations will be made and justified among companies.⁴

References

1. Negotiating for lower drug prices works, saves billions. CMS. August 15, 2024. Accessed August 15, 2024. https://www.cms.gov/newsroom/press-releases/negotiating-lower-drug-prices-works-saves-billions

2. Mattina C. CMS releases list of 10 drugs subject to price negotiation under IRA. The American Journal of Managed Care^®. August 29, 2023. Accessed August 15, 2024. https://www.ajmc.com/view/cms-releases-list-of-10-drugs-subject-to-price-negotiation-under-ira

3. Medicare drug price negotiation program: negotiated prices for initial price applicability year 2026. CMS. August 2024. Accessed August 15, 2024. https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026

4. Patchen T. Experts analyze IRA’s effect as the industry awaits negotiated CMS drug prices. BioSpace. August 14, 2024. Accessed August 15, 2024. https://www.biospace.com/policy/experts-analyze-iras-effect-as-the-industry-awaits-negotiated-cms-drug-prices