The Biden administration announced Tuesday it is beginning talks with drug makers behind 10 expensive medications to lower prices for recipients of Medicare, the national health insurance program for older Americans and people with disability status.
All agreed to begin negotiations ahead of the October 1 deadline, even though several of the pharmaceutical companies are suing the administration to block the drug pricing program that was created in the Inflation Reduction Act.
The negotiations are expected to last until 2024, with the lower prices expected to go into effect in 2026.
The Congressional Budget Office "estimated that price negotiation will lower average drug prices paid by Medicare and will reduce the budget deficit by $25 billion in 2031." However, this might not translate to lower costs for Americans.
"The program is really designed to save Medicare money," Juliette Cubanski, the deputy director of the Program on Medicare Policy at nonpartisan group KFF, previously told Insider. "Patients could see some lower out-of-pocket costs, but that's less certain."
The negotiation process will look into each drug's clinical benefit, how well it fulfills an unmet medical need, and its impact on those on Medicare. KFF estimates Medicate provides health insurance coverage to 65 million people.
Some companies say allowing Medicare to negotiate prices could cut profits and therefore spending in research and development.
Prior to the law, Medicare was prohibited from negotiating directly with pharmaceutical companies.
"The Biden-Harris Administration wants Americans with Medicare to have access to innovative, life-saving treatments," said Health and Human Services Secretary Xavier Becerra in a release. "Negotiating provides us a critical tool to ensure they get those prescription drugs at lower prices – just as the U.S. Department of Veterans Affairs has done for years."
These 10 drugs accounted for $50.5 billion — or 20% — of total Part D gross covered prescription costs between June 1, 2022 and May 31, 2023, according to the HHS press release. Nine million Medicare enrollees paid $3.4 billion in out-of-pocket costs last year for these 10 drugs.
These drugs include blood thinner Eliquis, diabetes drug Jardiance, and heart medicine Entresto.
In accordance with the Inflation Reduction Act, the Centers for Medicare & Medicaid Services will select up to 15 additional drugs covered under Part D for 2027 and 2028, followed by up to 20 more each year after that.
The Biden administration has recently taken aim at high drug prices and high profits at pharmaceutical companies. President Biden noted on Tuesday that Americans are paying two to three times more than other countries for the same prescription drugs.
In January, insulin costs were capped at $35 as part of the Inflation Reduction Act, which saved some seniors hundreds of dollars each month. Eli Lilly subsequently lowered the cost of insulin by 70% in March, capping out-of-pocket costs for insulin at $35.
