2023-01-12| Policy

Biden Administration Outlines Drug Price Negotiation Plan to Take Effect in 2026

by Reed Slater
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In an attempt to lower drug prices, the U.S. Department of Health and Human Services (HHS) announced a timeline for its Drug Price Negotiation Program under the Inflation Reduction Act. Important milestones for this year include proposing the HHS’s data collection process while inviting public opinion for discussion and publishing a list of ten Medicare Part D drugs eligible for price negotiations.

Potential Drugs Eligible for the Program

As part of the Drug Price Negotiation Program, the HHS will choose ten Medicare Part D drugs to lower prices for, providing easier access to those in need. Medicare Part D drugs include prescriptions filled at pharmacies and taken at home as opposed to Medicare Part B drugs administered at healthcare facilities by professionals. 

The HHS clarified that not all Medicare Part D drugs would be eligible for the program, and the department will only consider drugs on the market for at least seven years with no generic competitors. The exception to this requirement is biological products like vaccines which would require at least 11 years on the market for consideration. 

With those constraints in mind, some drugs with high potential for the program include some blood thinners, diabetes medications, and some cancer medicines. Top on the list of potential drugs is Bristol Myers Squibb’s Eliquis, a blood thinner that Medicare spent nearly $10 billion on in 2020. 

Other potential medications include BMS’s multiple myeloma med, Revlimid, J&J’s blood thinner, Xarelto, Merck’s type 2 diabetes pill, Januvia, and Eli Lilly’s type 2 diabetes injection, Trulicity. Most high-suspect drugs for the program do not fall into the biological medication category. Still, the HHS’s press release noted that several preventative vaccines, like those for shingles and Tdap, are already free due to the Inflation Reduction Act. 

In its recent timeline for the Drug Price Negotiation Program, the HHS said it would publish a list of ten Medicare Part D drugs for negotiation by September 1 this year. After that, companies owning those drugs would have to sign agreements to participate in the negotiation process by October 1. 

According to the press release, the first ten drugs for the program will be the first of many. In the future, the Centers for Medicaid and Medicare Services (CMS) will choose 15 more Medicare Part D drugs for negotiation in 2027, 15 more Medicare Part B and D drugs for 2028, and an additional 20 Part B and D drugs each year after that. 

Related Article: Biden’s New Executive Order Directs HHS to Find Ways to Lower Drug Prices

Encouraging Public Participation Throughout the Process

Prior to choosing ten drugs for negotiation, the HHS will disclose its data collection process for the procedure and invite the public to participate in a discussion to choose the most beneficial drugs for the program. These discussions could include topics like the offer and counteroffer process between Medicare and pharmaceutical companies and the methodology for applying maximum fair prices. 

By February 1, 2024, the CMS will send maximum fair price offers with justification to prescription drug companies. The negotiation period will span until August 1, 2024. By September 1 that year, the CMS will publish the ten selected drugs and their negotiated prices. The negotiated prices will take effect on January 1, 2026. 

With American prescription drugs costing two to three times as much as they do in some other countries, the Medicare Drug Negotiation Program is a step in the right direction, but there is a long way to go. Milestones this year will set a precedent for the future of the program. Still, even if everything goes as planned, Medicare beneficiaries will not have the opportunity to take advantage of negotiated prices for another three years. 

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