Medicare announces price cuts for 10 drugs in first round of drug price negotiations
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Key takeaways:
- CMS announced that prices for 10 drugs will be reduced for Medicare Part D recipients beginning in 2026.
- The cuts could save Medicare beneficiaries an estimated $1.5 billion in out-of-pocket costs.
The Centers for Medicare & Medicaid Services announced lower Medicare Part D prices for 10 drugs that will take effect in 2026, according to a press release.
As Healio previously reported, the Inflation Reduction Act signed into law in 2022 included several measures aimed at reducing health care costs for Americans. One provision of the law allowed Medicare to negotiate prescription drug prices for high-priced, single-source medications that do not have generic or biosimilar competition.
In 2023, CMS chose 10 drugs to be part of the first cycle of negotiations under the new law. On Aug. 1, CMS reached an agreement with pharmaceutical companies on a “Maximum Fair Price” for the 10 drugs. The new prices are slated to go into effect in 2026.
“When these lower prices go into effect, people on Medicare will save $1.5 billion in out-of-pocket costs for their prescription drugs, and Medicare will save $6 billion in the first year alone,” President Joe Biden said in a statement. “It’s a relief for the millions of seniors that take these drugs to treat everything from heart failure, blood clots, diabetes, arthritis, Crohn’s disease and more —and it’s a relief for American taxpayers.”
The affected medications and the Maximum Fair Prices for a 30-day supply that will take effect in 2026 are as follows:
- Sitagliptin (Januvia, Merck) — $113, a 79% decrease from the 2023 list price
- Insulin aspart (Fiasp, Fiasp FlexTouch, Fiasp PennFill, NovoLog, NovoLog FlexPen and NovoLog PennFill, Novo Nordisk) — $119, a 76% decrease from the 2023 list price
- Dapagliflozin (Farxiga, AstraZeneca) — $178.50, a 68% decrease from the 2023 list price
- Etanercept (Enbrel, Immunex) — $2,355, a 67% decrease from the 2023 list price
- Empagliflozin (Jardiance, Boehringer Ingelheim) — $197, a 66% decrease from the 2023 list price
- Ustekinumab (Stalera, Janssen) — $4,695, a 66% decrease from the 2023 list price
- Rivaroxaban (Xarelto, Jassen) — $197, a 62% decrease from the 2023 list price
- Apixaban (Eliquis, Bristol Myers Squibb) — $231, a 56% decrease from the 2023 list price
- Sacubitril/valsartan (Entresto, Novartis) — $295, a 53% decrease from the 2023 list price
- Ibrutinib (Imbruvica, Phamacyclics) — $9,319, a 38% decrease from the 2023 list price
The price cuts could have substantial impact for the Medicare program as well as Medicare recipients, according to the release. If the negotiated prices had been in effect in 2023, it would have resulted in an estimated $6 billion in net prescription drug cost savings and a 22% decline in aggregate net spending for Medicare. People enrolled in Medicare prescription drug coverage are expected to save an estimated $1.5 billion when the negotiated prices take effect. The savings are in addition to Inflation Reduction Act provisions, such as the cap on out-of-pocket drug costs for people with Medicare and a monthly $35 cap on out-of-pocket insulin costs for people with diabetes.
According to the release, the negotiated price will apply to each medication as long as it remains a part of the Medicare drug price negotiation program. Each year following 2026, CMS will publish an updated negotiated price for each medication. The new price will be increased by the annual percentage increase in the Consumer Price Index for all urban consumers. The price could also be updated if CMS and the pharmaceutical company renegotiate it.
“Today’s announcement will be lifechanging for so many of our loved ones across the nation, and we are not stopping here,” Vice President Kamala Harris said in a related statement. “Additional prescription drugs will be selected each year as part of our Medicare drug price negotiation program. This includes up to 15 additional drugs covered under Medicare Part D for negotiation in 2025, up to an additional 15 Part B and Part D drugs in 2026, and up to 20 drugs every year after that.”
Officials from Bristol Myers Squibb said in a statement that the Maximum Fair Price set for its medication apixaban “does not reflect the substantial clinical and economic value” of the drug. The company also stated the lower negotiated prices may not lead to savings for patients.
“The Maximum Fair Price is the price Medicare will pay for Eliquis and does not set what Medicare patients will pay for Eliquis now or in the future,” Bristol Myers Squibb said in a statement. “Insurance plans and their pharmacy benefit managers are ultimately responsible for what patients will pay for Eliquis, and the Inflation Reduction Act does not protect patients from potential increases to their cost-sharing or restrictions in access to Eliquis once the Maximum Fair Price goes into effect in January 2026. By focusing on government price setting, the Inflation Reduction Act overlooks the biggest problem in patient affordability: how plans determine patient out-of-pocket costs.”
According to the release, CMS published draft guidance on May 3 for the second round of drug price negotiations, which will take place in 2025. Any prices negotiated next year would take effect in 2027. If a medication in the first round of negotiations is later identified as a therapeutic alternative to a drug in the second negotiation cycle, the negotiated price from the first round of negotiations may be considered in the initial offer from CMS in the second round of negotiations.
References:
Statement from President Joe Biden on lower prescription drug prices. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/15/statement-from-president-joe-biden-on-lower-prescription-drug-prices. Published Aug. 15, 2024. Accessed Aug. 15, 2024.
Statement from Vice President Kamala Harris on lower prescription drug prices Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/15/statement-from-vice-president-kamala-harris-on-lower-prescription-drug-prices. Published Aug. 15, 2024. Accessed Aug. 15, 2024.
Statement on Inflation Reduction Act’s MFP for Eliquis (apixaban). Available at: https://www.bms.com/inflation-reduction-act-mfp-for-eliquis.html. Published Aug. 15, 2024. Accessed Aug. 15, 2024.
Perspective
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Susan Cornell, PharmD, CDE, FAPhA, FAADE
Today, there are many limitations for people to get the medications that they need to better manage their health. It is true that the cost of medications is skyrocketing. This is especially true for the preferred medications, such as those for diabetes that can lower blood glucose, while simultaneously reducing the risk for cardiometabolic disease, chronic kidney disease, heart failure and more.
It is interesting to note that several of the 10 drugs listed for the first round of Maximum Fair Prices taking effect in 2026 will become available as a generic before this price negotiation takes effect. Meaning, the generic version of the drug will be available and most likely, more affordable for people than the price that Medicare negotiates for the medication. Which brings up another question: If Medicare negotiates a reduced price, will the cost savings be shared with the patient?
The concern has been and remains the “middlemen.” Insurance companies and their pharmacy benefit managers have and still control the purse strings. The pharmacy benefit managers are the responsible parties that determine the amount patients will pay for their medication, not Medicare, nor the pharmaceutical company.
It is unclear if the Inflation Reduction Act will help reduce medication costs for patients or will this Act only increase profits for pharmacy benefit managers. It is time to stop feeding the monster.
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