The Biden Administration has made public the list of ten medications chosen for Medicare price negotiations under the Inflation Reduction Act (IRA), in a widely anticipated move.
These medications were selected based on the substantial amount of Medicare Part D spending they will generate between June 2022 and May 2023, which will total more than $50 billion.
Medicare’s Ambitious Cost-Cutting Move
This choice represents 20% of the annual pharmacy drug expenditures for the Medicare program.
The contentious Inflation Reduction Act’s primary goal is to save the US government $25 billion in prescription expenditures over the following eight years while lowering out-of-pocket (OOP) expenses for Medicare beneficiaries.
The pharmaceutical companies in charge of these medications must reach agreements with the US Centers for Medicare & Medicaid Services (CMS) by October 1, 2023, to participate in these price talks.
Inaction might lead to severe tax penalties or even the possibility of losing all access to Medicare and Medicaid coverage.
The CMS has given these businesses until October 2, 2023, to submit sensitive data, including research and development (R&D) costs, statistics on federal financial support, revenue, and sales volume.
It is anticipated that each pharmaceutical business will make strong arguments supporting the economic analysis of their individual goods.
The CMS will consider the clinical advantages of the drug, comparative efficacy information, unmet medical requirements, and its effects on particular groups.
The CMS must reveal the initial offer of a maximum reasonable price to each enterprise by February 1, 2024, along with justifications, in the subsequent rounds of negotiation.
After that, businesses have 30 days to comment on the provisional price. The projected CMS drug discounts range from 25% to 60% off the advertised price.
By September 1, 2024, these negotiated prices will be made public and go into effect on January 1, 2026.
The ten medications chosen significantly impact the pharmaceutical companies involved and are frequently used to treat chronic diseases.
Medicare beneficiaries who used these medications in 2022 had out-of-pocket expenses of $3.4 billion.
These pricing negotiations are expected to decrease OOP spending, which may enhance patient adherence to medication.
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Ten Drugs Targeted for Price Negotiations
Although the list of chosen medications is generally predictable, it contains fewer cancer treatments than initially anticipated by industry analysts.
Due to decreased usage over the previous year, several medications may have been eliminated. However, other medications that weren’t picked at this time could be chosen in the future.
Interestingly, Janssen’s Stelara (ustekinumab) and Novo Nordisk’s Fiasp/Novolog (insulin aspart) are unanticipated additions to the list.
Notably, some chosen medications may soon face generic or biosimilar competition, which might lessen their commercial impact when the agreed-upon prices go into force in 2026.
The Medicare drug price scheme is fiercely opposed by the pharmaceutical industry and its supporters, who claim that it will hinder innovation, cut back on funding for the development of small-molecule drugs, and have an adverse effect on patient access.
They contend that Medicare’s gross spending numbers do not consider the discounts, fees, and rebates given to prescription insurance programs.
Pharmaceutical firms and industry supporters are suing the Biden Administration because the Inflation Reduction Act is unconstitutional.
Concerned about future inclusion, other pharmaceutical companies, even some whose medications did not make the original list, have filed lawsuits.
Given the increasing number of legal challenges, the US Supreme Court is likely to rule on these matters in the end.
The Biden Administration is unwavering in its conviction that the Inflation Reduction Act is a crucial move to reduce growing medicine costs and safeguard the interests of American residents despite the ongoing legal disputes.
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