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ROUND UP: “New Era in Medicare” Begins with Opening Offers in Negotiation to Lower Drug Prices

By February 1, 2024No Comments

The Center for Medicare and Medicaid Services took another major step to lower the prices of prescription drugs and end the days of drug companies charging whatever they want. Kicking off the first round of negotiations made possible by provisions in the Inflation Reduction Act, Medicare made its initial offer to drugmakers. The Inflation Reduction Act’s Medicare Drug Price Negotiation Program will lower prices for some of the highest-cost prescription drugs that seniors rely on to treat conditions like cancer, diabetes, and autoimmune disorders – conditions that disproportionately impact women, communities of color, and people in rural areas. Meanwhile, every Republican voted in Congress voted against the Inflation Reduction Act and Republicans have now introduced legislation to repeal it and are fighting to protect drug company profits. Final negotiated prices will be announced in September and will take effect in 2026.


The Washington Post: Today: Biden Administration Makes Opening Offers In Drug-Price Negotiation Program. “Negotiations must end by Aug. 1. If the companies and health officials agree, the new prices will take effect in 2026. The White House put serious muscle behind its announcement. The administration released a new analysis about high U.S. drug costs, shared a high-level memo, launched a new site to inform Medicare beneficiaries… Leslie Dach, the chair of Protect Our Care, a Democrat-aligned health advocacy group, called Thursday’s move “a giant step forward” in efforts to lower U.S. drug prices. “Medicare negotiation means more seniors will be able to afford the medications they need to stay alive,” he added in a statement.” [The Washington Post, 2/1/24]

The New York Times: U.S. Makes Initial Offers In Medicare Drug Price Negotiations. “The initial round of price offers is a key step in the negotiation process. Each drugmaker has until early March to accept the offer or propose a counteroffer to the government. A series of negotiation sessions could follow, with the process set to conclude by August. Health policy experts said the announcement of the initial round of offers amounted to a kind of starting gun, giving the Biden administration the chance to take an aggressive posture and test the willingness of drugmakers to acquiesce.” [The New York Times, 2/1/24]

Axios: The Challenge For Medicare Drug Negotiators: How To Value A Medicine’s Benefits. “It sets off a monthslong back-and-forth with drugmakers before final prices are revealed in September — all while the industry fiercely contests the negotiations in court… The law is explicit about factors that Medicare has to consider when coming up with that price, including how much it costs to manufacture or distribute the drug and the manufacturer’s research and development costs… A study published last year in JAMA found that of the 50 top-selling Medicare drugs in 2020, more than half were deemed by assessment organizations in Canada, France, and Germany to offer little to no therapeutic benefit over existing therapies.” [Axios, 2/1/24]

Politico: CMS Sends First Price Offers To Drugmakers. “CMS has promised to use several factors to calculate the prices, such as whether the product has a therapeutic equivalent and the overall research and development costs. But during a call with reporters Wednesday evening, Biden administration officials declined to say how much savings the initial price offers would generate. A previous estimate showed that, between June, 2022 and May, 2023, the 10 drugs cost the federal government $50.5 billion.” [Politico, 2/1/24]

STAT: Biden Administration Makes Opening Offers In Medicare Drug Price Negotiations. “The offers will not be made public unless a manufacturer chooses to publicly disclose information about the talks, a senior administration official said. Companies have until March 2 to either accept the government’s offer or propose a counteroffer. The Biden administration will publish the final prices by Sept. 1 of this year after the negotiation process ends. The negotiated prices won’t take effect until 2026.” [STAT, 2/1/24]

USA Today: Medicare Drug Price Negotiations Kick Off With Price Offers On These 10 Drugs. “Under President Joe Biden’s Inflation Reduction Act, another 30 drugs will be selected over the next two years for negotiated prices that will be rolled out in 2027 and 2028. HHS Secretary Xavier Becerra heralded a “new era in Medicare” with the federal heath program’s newfound authority to negotiate drug prices under Biden’s signature health and climate legislation… A senior Biden administration official said the president has said drug companies should have a fair return on their investments but noted the drug selected for negotiation have been on the market for years without generic alternatives.” [USA Today, 2/1/24]

CNN: Medicare Drug Price Negotiations Start After Biden Administration Makes Initial Offers. “CMS considered multiple factors when developing its initial offer, including the drugs’ clinical benefits and the price of alternatives, among others. The agency also held listening sessions so patients and others could provide input on the selected drugs. The discounts will range from at least 25% to 60% off the non federal average manufacturer price, depending on when the drugs were approved… In the first two years of negotiations, CMS will select only Part D drugs that are purchased at pharmacies. It will add Part B drugs, which are administered by doctors, to the mix for 2028.” [CNN, 2/1/24]

The Wall Street Journal: U.S. Medicare Drug-Price Negotiations Start Now. “Under a new U.S. law, the federal government on Thursday is sending its initial offers of how much it is willing to pay for Medicare patients’ use of an initial batch of 10 cancer, diabetes and other drugs to Johnson & Johnson, Merck and other big companies… At stake are tens of billions of dollars in spending by the Medicare program for seniors, and equally large revenues for the industry. Medicare patients taking the drugs might see savings in out-of-pocket costs, though that could vary widely by drug.” [The Wall Street Journal, 2/1/24]