Gary A. Incaudo, MD

Just as the IRA of 2022 has had no appreciable effect on inflation, to say that the IRA gives Medicare the power to negotiate drug prices is verbal chicanery. The Act allows Medicare to choose 10 medications starting this year rising to a total of 60 by 2029 and sets a ‘maximum fair price’ for each medication by controversial criteria that must fall somewhere between 25% to 60% of the list price. The pharmaceutical company then has three choices: it can agree to the dictated price, disagree with the dictated price and pay a daily excise tax starting at 65% of product sales and increases by 10% each quarter to a maximum of 95% or withdraw the drug from approved Part D Medicare options. This does not even remotely fall under the definition of ‘negotiate.’ Rather, the IRA gives the government the power to choose winners and losers by setting the price of medications with little accountability, oversight or input from seniors or their doctors.

Let’s use Eliquis, which was chosen to be one of the 10 medications to be ‘negotiated’ this year under the IRA, as an example. No one would argue that the approval of this anticoagulant in 2012 represented a major improvement in patient care when compared with warfarin. In a commentary published in the Wall Street Journal (Aug 29, 2023), the Chairman and CEO of Bristol Myers Squibb (BMS), the manufacturer, stated that Eliquis ranked 540th among Medicare Part D spending per patient in 2021 and that Medicare patients, on average, pay $55 per month for Eliquis, and half of all Eliquis users pay $45 or less per month. However, my mail order pharmacy tells me an Eliquis 2.5 mg twice a day will cost my Medicare Part D $1,816.83 for 3 months and my share would be $558.37 as a covered drug. If I purchase the identical brand name prescription directly from a Canadian pharmacy, I could choose either $346 from BMS Australia or $498 from BMS United Kingdom for my out-of-pocket expense. To further obscure the issue for consumers, Medicare admits that, for some medications under the IRA, our patients will not be paying appreciably less at the pharmacy. Rather it is proposed that any savings to Medicare would be put toward a future $2,000 annual cap on what seniors will pay out of pocket for medications the government covers under Part D.

The confusion surrounding current and future drug pricing and availability under different insurance plans is overwhelming, and it is no wonder the American public is angry. The American consumer is, in essence, subsidizing the drug costs for other countries, most of which function under a socialized medicine model. Still, we mustn’t lose sight of the fact that the U.S. is the engine for most major biotechnical breakthroughs that are, and will be, saving more and more lives. This is especially important today, given the advancements in gene research and small molecule therapies. The biomedical industry appears to be on the cusp of ameliorating and curing many major diseases including cancer. Unfortunately, government price controls carry the danger of reducing future biomedical investment in research and development for those cures. A University of Chicago study estimates that drug price controls risk 135 fewer drugs being approved through 2039. At the very least, we urgently need a solution that maintains incentives for research and development while achieving equity in pricing within the international marketplace at an affordable price. Regrettably, the heavy handedness of the IRA is not the answer and risks causing more harm than good.

References:

• Issue brief: the impact of biopharmaceutical innovation on health care spending. https://cpb-us-w2.wpmucdn.com/voices.uchicago.edu/dist/d/3128/files/2022/08/Impact-of-Biopharmaceutical-Innovation-on-Health-Spending-Final-Aug-3.pdf. Published August 2022. Accessed Sept. 1, 2023.
• Selected health provisions of the Inflation Reduction Act. https://crsreports.congress.gov/product/pdf/IF/IF12203. Published Sept. 1, 2022. Accessed Sept. 1, 2023.
• The high cost of price controls on Eliquis and other drugs. https://www.wsj.com/articles/the-high-cost-of-price-controls-on-eliquis-and-other-drugs-ira-biden-71b45751. Published Aug. 29, 2023. Accessed Sept. 1, 2023.

Rita K. Kuwahara, MD, MIH

Today marks a historic day. The CMS’ selection of 10 critical medicines eligible for drug price negotiation sets off the process that will allow Medicare, for the first time, to negotiate prices of a small subset of prescription medicines directly with drug manufacturers.

The IRA, passed by Congress and signed into law by President Biden just over 1 year ago, has made this possible. This landmark piece of legislation has already started lowering health care costs and making prescription drugs more affordable for those with Medicare coverage, and the IRA will continue to bring down the costs of critical medicines over the next several years.

Earlier this year, the IRA provision capping the out-of-pocket cost of lifesaving insulin at $35 per month for patients with Medicare has already prevented deaths and complications of diabetes nationwide by decreasing the number of people entirely forgoing or rationing their insulin due to cost.

Starting in 2025, patients with Medicare Part D will not pay more than $2,000 out-of-pocket annually for their covered prescription medicines, and in 2026, Medicare will lower costs by paying the negotiated maximum fair prices for the first 10 medicines eligible for price negotiation that were named today.

The IRA is saving lives, and we must do everything in our power to protect the IRA and counter any efforts to restrict, undermine or overturn the IRA.

Although we can celebrate today’s first steps in allowing Medicare to begin the process of negotiating the prices of these initial 10 lifesaving and life preserving medicines, our work is not done.

Recent lawsuits have threatened Medicare’s ability to begin the process of prescription drug price negotiation, even though the Veterans Health Administration has allowed drug price negotiation for years, and as physicians, we must stand up for and with our patients to ensure that Medicare is allowed to implement the price negotiation of these first 10 medicines in 2026, as the law intends.

As physicians, we know what it means when our patients cannot afford their medicines. Prescription drug affordability is a matter of life and death, and our patients cannot wait.

For too long, we have seen our patients struggle to afford their lifesaving medicines. It is unacceptable that families in our nation pay more for prescription medicines in the U.S. than every other country in the world, and it is unconscionable that our patients are forced to choose between paying for essential medicines to maintain their health and being able to afford the food and housing necessary to keep their families alive.

Our patients must be able to afford their medicines, and we must support the work of the Biden-Harris administration to fully implement the IRA so that our patients can access critical medicines needed to maintain good health, keep families healthy and improve the health of all our nation’s communities.

References:

• Drugmakers, trade groups push back against Medicare drug price negotiations. https://www.politico.com/news/2023/08/29/drugmakers-trade-groups-push-back-against-medicare-drug-price-negotiations-00111936. Accessed Aug. 29, 2023.
• Inflation Reduction Act: CMS implementation timeline. https://www.cms.gov/files/document/10522-inflation-reduction-act-timeline.pdf. Accessed Aug. 29, 2023.
• McCaughan M. Health Aff. 2017;doi:10.1377/hpb20171008.000174.