All 10 pharmaceutical manufacturers with drugs selected for the Medicare Drug Price Negotiation Program have agreed to participate, the federal government announced on Tuesday.
The agreement means the negotiation process can now begin, US Department of Health And Human Services (HHS) Secretary Xavier Becerra told Healthcare Brew. “Having all the companies that manufacture these 10 drugs participate means that President Biden’s lower-cost prescription drug law is working,” Becerra said. “We’re now seeing it take effect, and good for America that we’re finally going to be able to try to get more fair prices for the American public when it comes to their drugs.”
The first step in the negotiation process involves the Centers for Medicare & Medicaid Services (CMS) meeting with patients to get their input on the clinical benefit of each of the 10 drugs. HHS plans to send that information to the manufacturers, and then CMS and the drugmakers can begin talking about drug prices, Becerra said.
The drug price negotiation program, created under the 2022 Inflation Reduction Act, is intended to lower the cost of some of the most popular and expensive drugs in Medicare. The Biden administration unveiled the first 10 drugs to face negotiations in late August, which include treatments for diabetes, Crohn’s disease, cancer, and chronic heart failure.
Medicare beneficiaries paid a total of $3.4 billion in out-of-pocket costs for the 10 drugs in 2022, according to HHS.
The 10 drugmakers, which include Merck, Bristol Myers Squibb, and AstraZeneca, were given an October 1 deadline to sign agreements indicating whether they’d participate in negotiations, Healthcare Brew previously reported. Any drugmaker that didn’t sign would have been subject to tax penalties.
Although all 10 drugmakers signed the agreements, several of them—including Merck, Bristol Myers Squibb, and AstraZeneca—still have pending lawsuits against HHS, arguing that the program is unconstitutional and would make drugmakers lose profits, therefore reducing the amount of money they can spend on research and development.
The pharma industry’s top lobbying group, PhRMA, also sued the federal government in June, claiming that the negotiation program violates the separation of powers clause by giving HHS too much authority.
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“Today the administration is attempting to take a victory lap on companies being coerced into an ‘agreement’ they couldn’t refuse, while at the same time inflating their own numbers to tell a misleading story to the American public,” Alex Schriver, SVP of public affairs at PhRMA, told Healthcare Brew. “We’ve long supported changes that would lower costs for patients at the pharmacy, including a cap on out-of-pocket costs for Medicare Part D beneficiaries. However, we won’t support a government price-setting scheme that allows a single agency to dictate the price of medicines and what future treatments and cures are worth developing.”
Becerra told Healthcare Brew that despite the lawsuits, HHS aims to “move forward” with the negotiation process, saying “the lawsuits are what they are.”
HHS said in a statement that the negotiations will take into consideration the costs associated with research and development, as well as costs for production and distribution.
“We’re going to take into account all the information that companies give us because we want them to continue to innovate,” Becerra said. “What we just don't want is for those products— especially those that are made in America—to then be priced two or three times what they would be priced in other countries.”
The department is set to announce the negotiated prices on September 1, 2024, and those prices go into effect on January 1, 2026. Fifteen more drugs are due to be selected for the negotiation program in both 2027 and 2028, and 20 drugs are to be added each year after that.
“We’re going to try to be as open and transparent as we can in terms of how we do this. We think the negotiations don’t have to be done behind closed doors or behind the curtain,” Becerra said. “It’s a pretty simple process. It’s as American as you can get, having market-based programs in place to get the best price.”