Medicare to Begin Directly Negotiating Drug Prices with Pharmaceutical Industry
Medicare is set to engage in direct negotiations with the pharmaceutical industry for the first time in its history. The Centers for Medicare and Medicaid Services will announce a list of 10 drugs to target this year, with the goal of reducing drug costs. Several pharmaceutical companies, including Merck, Bristol-Myers Squibb, Johnson & Johnson, and Abbvie, have already indicated that some of their medications will be subject to negotiation.
Drugs Likely to be Targeted
The following six drugs are expected to be included in the negotiations, based on an analysis published in March:
- Jardiance, used to treat heart failure
- Enbrel, used to treat rheumatoid arthritis
- Symbicort, used to treat asthma
- Ibrance, used to treat breast cancer
- Xtandi, used to treat prostate cancer
- Breo Ellipta, used to manage pulmonary disease
Surge in List Prices
The Inflation Reduction Act has paved the way for these negotiations, which aim to address the soaring list prices of Medicare’s top 25 drugs. According to AARP, the list price of these drugs has more than tripled on average since their introduction to the market, significantly outpacing inflation rates. For example, Januvia’s price has risen 275% since 2006, while Eliquis has increased by 124% since 2012. These price hikes have put a financial burden on Medicare beneficiaries, many of whom struggle to afford their medications.
Industry Opposition
The pharmaceutical industry has filed numerous lawsuits to block these negotiations, arguing that they violate their property rights and threaten future drug development. Companies such as Bristol Myers Squibb, Johnson & Johnson, and Merck, along with industry groups like the U.S. Chamber of Commerce and Pharmaceutical Research and Manufacturers of America, have all taken legal action. Despite these challenges, Medicare is moving forward with the negotiations.