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The Biden administration on Tuesday unveiled the first 10 prescription drugs that will be subject to price negotiations between manufacturers and state health insurancestarting a controversial process which aims to make expensive drugs more affordable for older Americans.
President Joe Biden Inflation Reduction Lawwhich passed on a partisan vote last year, gave Medicare the power to directly discuss drug prices with manufacturers for the first time in the nearly 60-year history of the federal program. The agreed prices for the first round of drugs are programmed It will enter into force in 2026.
Here are the 10 drugs subject to initial talks this year:
- Eliquis, made by Bristol-Myers SquibbIt is used to prevent blood clotting and reduce the risk of stroke.
- Jardiance, made by Boehringer Ingelheim, is used to lower blood sugar in people with type 2 diabetes.
- Xarelto, made by johnson and johnsonIt is used to prevent blood clotting and reduce the risk of stroke.
- Januvia, made by merchIt is used to lower blood sugar in people with type 2 diabetes.
- Farxiga, manufactured by AstraZenecaIt is used to treat type 2 diabetes.
- Entrestro, produced by NovartisIt is used to treat certain types of heart failure.
- Enbrel, manufactured by amgenIt is used to treat rheumatoid arthritis.
- Imbruvica, made by abbvieIt is used to treat different types of blood cancers.
- Stelara, made by Janssen, is used to treat Crohn’s disease.
- fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill, insulins manufactured by new nordisk.
The Medicare negotiations are the centerpiece of the Biden administration’s efforts to rein in the rising cost of drugs in the US Some Democrats in Congress and consumer advocates have long pushed for change, as many Seniors across the country struggle to pay for care.
But the pharmaceutical industry sees the process as a threat to revenue growth, profits and pharmaceutical innovation. Drug manufacturers like merch and johnson and johnson and his supporters aim to derail the negotiations, filing at least eight lawsuits in recent months seeking to declare them unconstitutional.
The drugs listed Tuesday are among the top 50 spenders for Medicare Part D, which covers prescription drugs seniors get at retail pharmacies. That is based on data from June 1, 2022 to May 31, 2023, according to the Centers for Medicare & Medicaid Services, or CMS.
The drugs have been on the market for at least seven years without generic competitors, or 11 years for biologics like vaccines.
Medicare covers approximately 66 million people in the US and 50.5 million The patients are currently enrolled in Part D plans, according to the health policy research organization KFF.
Drugmakers must sign agreements to join the negotiations before October 1. CMS will then make an initial price offer to manufacturers in February 2024, and those companies have one month to accept or counter-offer.
Negotiations will end in August 2024 and the agreed prices will be published on September 1, 2024. The reduced prices will not take effect until January 2026.
If a drugmaker refuses to deal, it must pay an excise tax of up to 95% of its drug sales in the United States or withdraw all its products from the Medicare and Medicaid marketplaces.
The pharmaceutical industry argues that the penalty can be as up to 1,900% of the daily intake of a medication.
After the initial round of talks, CMS can negotiate prices for another 15 drugs by 2027 and an additional 15 in 2028. The number increases to 20 negotiated drugs per year beginning in 2029 and beyond.
“I think it’s incredibly important to keep in mind that the negotiation process is cumulative,” said Leigh Purvis, director of prescription drug policy at the AARP Public Policy Institute. “We could have up to 60 drugs negotiated by 2029.”
CMS will only select Medicare Part D drugs for covered drugs during the first two years of negotiations. In 2028, it will add more specialty drugs covered by Medicare Part B, which are usually administered by physicians.
Drug price negotiations are expected to save Medicare an estimated amount $98.5 billion more than a decade, according to the Congressional Budget Office.
merch, johnson and johnson, Bristol-Myers Squibb and Astellas Pharmacy They are among the companies suing to stop the negotiation process. The industry’s largest lobby group, PhRMA, and the US Chamber of Commerce have filed their own lawsuits.
The lawsuits make similar and overlapping claims that the Medicare negotiations are unconstitutional.
The companies argue that the talks would force drugmakers to sell their drugs at deep discounts, below market prices. They claim this violates the Fifth Amendment, which requires the government to pay reasonable compensation for private property taken for public use.
The lawsuits also argue that the process violates the drug makers’ First Amendment free speech rights, essentially forcing the companies to accept that Medicare is negotiating a fair price.
They also contend that the talks violate the Eighth Amendment by imposing an excessive fine if drugmakers refuse to participate in the process.
The lawsuits are scattered in federal courts across the United States. Legal experts say the pharmaceutical industry hopes get contradictory sentences from the federal appellate courts, which could expedite the process all the way to the Supreme Court.
Some drug manufacturers have confirmed their intention to take their legal battle to the highest court in the country.
“As we look forward, we’re going to take this to the max, which means we’re going to take it through the District Court and, if necessary, to the Circuit Court and ultimately to the Supreme Court,” he said. Merck CEO Robert Davis during an earnings call earlier this month. “So that’s really the strategy.”
Meanwhile, the Biden administration has vowed to fight legal challenges.
Biden and his top health officials have welcomed the lawsuits as proof that they are making progress in the fight to lower drug prices.
“Big Pharma doesn’t want this to happen, so they are suing us to stop us from negotiating lower prices so they can increase their profits,” the president said. in a speech at the White House last month. “But we’re going to get ahead. We’re going to continue to stand up to Big Pharma.”