White House receives counteroffers from drug companies

Photo: Jeff Lagasse/Healthcare Finance News

All manufacturers participating in the first cycle of Medicare drug price negotiations have responded with counteroffers, according to the Department of Health and Human Services. 

The news comes after HHS sent initial offers on Feb. 1, as the agency was empowered to do by the Inflation Reduction Act, the White House's attempt at lowering drug costs. The law is a cornerstone of the Biden administration's efforts on that front.

Details of the drug companies' counteroffers were not disclosed, although HHS Secretary Xavier Becerra described them as "good faith, up-front negotiations."

Negotiations will continue over the next several months. If HHS and a participating manufacturer agree on a maximum fair price by the end of the negotiation period, those new negotiated prices will be published by Sept. 1 and will take effect beginning in 2026.

WHAT'S THE IMPACT

At the same time, HHS' Office of the Assistant Secretary for Planning and Evaluation (ASPE) has released a fact sheet detailing the projected impact of the Inflation Reduction Act on lowering drug costs for the roughly 8 million Medicare Part D enrollees who live in rural areas.

About 281,000 rural enrollees would have benefited from the IRA's $35 cap on cost-sharing for each Medicare-covered insulin product had it been in effect in 2020, the research found, while roughly 481,000 rural enrollees would not have had any out-of-pocket costs for recommended Part D covered adult vaccines had this part of the law been in place in 2021. 

Upward of 289,000 rural enrollees are projected to save $1,000 or more in 2025 due to the law's new caps on out-of-pocket costs and other drug-related provisions, the research found.

ASPE also found that about 20% of Medicare enrollees using NovoLog/Fiasp (insulin) reside in rural areas, which is a higher proportion compared with the Medicare Part D population. Rural Medicare enrollees have disproportionately higher rates of certain health conditions relative to their urban peers, including higher rates of heart disease, stroke, cancer and chronic lower respiratory disease. They also report greater healthcare costs and difficulty affording prescription drugs.

People living in rural communities enrolled in the Extra Help program will save about an average of $300 annually under the law, according to ASPE.

THE LARGER TREND

The Inflation Reduction Act's suite of provisions aimed at lowering prescription drug and healthcare costs appears to be making an impact, at least according to HHS. The law expanded eligibility for full benefits under the Low-Income Subsidy program (LIS or "Extra Help") under Medicare Part D at the beginning of this year; nearly 300,000 people with low and modest incomes currently enrolled are now benefiting from the program's expansion.

A public education campaign is currently underway to reach the more than 3 million people who are likely eligible for the program but not yet enrolled. And as of Jan. 1, some people enrolled in Medicare Part D who have high drug costs will, for the first time, have their out-of-pocket costs capped at about $3,500. 

In 2025, all people with Medicare Part D will benefit from a $2,000 cap on out-of-pocket prescription drug costs, said HHS.
 

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.