Updated August 29, 2023 at 3:39 PM 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 drugmakers.
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:
- blood thinners Eliquis and Xarelto;
- diabetes drugs Jardiance, Januvia, Farxiga and Fiasp/Novolog insulin;
- Enbrel and Stelara, drugs used to treat autoimmune diseases like rheumatoid arthritis, psoriasis and Crohn's disease;
- Imbruvica, a drug that treats blood cancers.
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 cast the price negotiations as part of his push to lower costs for Americans, a core part of his reelection campaign message for the 2024 race.
Biden told cheering supporters at the White House on Tuesday that drug companies fought the measure in Congress, and are now fighting it in the courts. "We're going to see this through. We're going to keep standing up to Big Pharma and we're not going to back down," Biden said.
Sen. Amy Klobuchar, D-Minn., told NPR's Morning Edition that the list featured "blockbuster drugs" and said reducing their cost would make a difference to seniors — and eventually to other people who rely on the drugs.
"When you have the biggest leverage with the biggest drug-buying group in the country — seniors, 50 million of them — get better prices, it affects the whole ecosystem and the marketplace," Klobuchar said.
Drugmakers 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 the 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.
Drugmakers said many of the drugs already have rebates and discounts. For example, the government said Eliquis, sold by Bristol Myers Squibb, cost Medicare $16.4 billion in the year ending May 2023. But in a statement, the company said that figure was more than three times the actual program spending because it doesn't include rebates, discounts and fees paid to Medicare and Part D plans.
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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