The federal government unveiled the initial batch of the ten drugs to be subjected to the first-ever price negotiations by Medicare in collaboration with pharmaceutical companies. There are concerns about the negative impact of this move on drug innovation among a group of businesses.
The U.S. Department of Health and Human Services disclosed on Tuesday the selection of the first ten drugs included in Medicare Part D that will undergo negotiation:
- Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill
This assortment encompasses some of the most extensively used and costly medications. According to the Department of Health and Human Services, Medicare beneficiaries who used these drugs faced a combined out-of-pocket expense of $3.4 billion in 2024. These drugs contributed to a total of $50.5 billion in covered prescription drug costs under Part D. From June 1, 2024, to May 31, 2024, this represents roughly 20% of covered prescription drug costs for Medicare Part D.
Secretary Xavier Becerra of the HHS commented that pharmaceutical corporations have amassed significant profits for an extended duration. At the same time, American families struggled with exorbitant prices, impeding their ability to afford essential prescription medications.
Medicare is expected to benefit the most from the savings. The negotiations with participating pharmaceutical entities are scheduled for 2024 and 2024. Any mutually agreed-upon pricing adjustments would take effect starting from 2026.
By September 1, 2024, the Centers for Medicare & Medicaid Services must publish the negotiated prices for the designated drugs. These prices are slated to be enforceable from January 1, 2026 onwards.
As per the stipulations under the Inflation Reduction Act, detailed by the Department of Health and Human Services, future iterations will involve the selection of up to 15 additional drugs covered by Part D for negotiation in 2027, up to 15 more for 2028 (including drugs under Part B and Part D), and up to 20 additional drugs each subsequent year.
However, the U.S. Chamber of Commerce, a representative business body, initiated legal action in July against the Department of Health and Human Services and the Centers for Medicare & Medicaid Services, opposing the pricing policy. The Chamber is seeking a preliminary injunction by October 1, 2024.
The business coalition contends that the government’s pricing strategy might yield unintended consequences. Neil Bradley, Executive VP and Chief Policy Officer of the U.S. Chamber, expressed support for accessible medicine but raised concerns that the government’s approach may be counterproductive.
Bradley said while the U.S. Chamber advocates for affordable medication, an approach involving government price controls could yield unfavorable outcomes, potentially limiting access to vital medications, delaying patient treatment, and impeding the search for innovative life-saving remedies. He further expressed apprehensions that the pricing restrictions could hinder innovation.
President and CEO of the Pharmaceutical Research and Manufacturers of America, Stephen Ubl, cautioned about repercussions from the government’s drug pricing blueprint. Ubl commented that the announcement resulted from a rushed process that prioritized short-term political gains over the well-being of patients. Granting a sole government agency the power to arbitrarily set drug prices, with no proper accountability, oversight, or input from patients and physicians, will have long-lasting negative effects that will persist even after the current administration is over. Insurance companies and pharmacy benefit managers can hinder medication access through increased copayments, formulary restrictions, and utilization management.