Drug companies agree to participate in Medicare negotiations

Photo: Kinga Krzeminska

All 10 drug companies whose drugs were selected for price negotiation with Medicare for the first cycle of the program have decided to participate in those negotiations, according to the Centers for Medicare and Medicaid Services. 

The drug companies have also indicated they will participate in negotiations with Medicare during the remainder of 2023 and in 2024, and any agreed-upon negotiated prices will become effective beginning in 2026.

These prescription drugs are some of the costliest and most commonly used, CMS said. They accounted for $50.5 billion in Part D gross covered prescription drug costs, or about 20%, of the total, as measured between June 1, 2022 and May 31, the time period used to determine which drugs were eligible for negotiation. 

Medicare enrollees paid a total of $3.4 billion in out-of-pocket costs in 2022 for these drugs, CMS said.

WHY THIS MATTERS

October 1 was the deadline for companies with a drug selected for the negotiation program to choose whether to sign agreements to participate in the negotiation process. 

CMS will publish any agreed-upon negotiated prices for the selected drugs by September 1, 2024; those prices will become effective starting January 1, 2026. 

Participating companies with a drug selected for the negotiation program had until October 2 to submit manufacturer-specific data for CMS to consider in the negotiations. 

Additionally, October 2 was the deadline for the public to submit data on therapeutic alternatives to the selected drugs, data related to unmet medical needs and data on impacts to specific populations.

CMS will select for negotiation up to 15 more drugs covered under Part D for 2027, up to 15 more drugs for 2028 (including drugs covered under Part B and Part D), and up to 20 more drugs for each year after that. 

Other dates for implementation include:

• Fall 2023: CMS will invite each participating drug company with a selected drug to engage in a meeting on its data submission. CMS will also hold a patient-focused listening session for each selected drug between October 30 and November 15, 2023. 
• February 1, 2024: CMS will send an initial offer of a maximum fair price for a selected drug with a justification to each drug company participating in the negotiation program.
• August 1, 2024: The negotiation period ends.
• September 1, 2024: CMS will publish the maximum fair prices that have been negotiated.

THE LARGER TREND

The Inflation Reduction Act gave Medicare the authority to negotiate prescription drug prices for the first time in history, and, in late August, the Department of Health and Human Services announced the 10 drugs selected.

ON THE RECORD
 
"We are pleased that all 10 drug companies will participate in Medicare drug price negotiations. We look forward to continuing this critical work to lower healthcare costs for the American people and make sure seniors don't have to choose between paying for prescription drugs or putting food on the table," said HHS Secretary Xavier Becerra.

The 10 companies participating in the Medicare Drug Price Negotiation Program and the drug names are: 

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org