President Joe Biden on Tuesday unveiled the biggest change to Medicare in more than six decades, as his administration identified the first 10 prescription drugs that the government will target for direct price negotiation.
The direct price negotiations were a key plank of Biden's 2022 Inflation Reduction Act, which enabled the government to barter directly with drug companies and lower the price of key medications used by the more than 52 million Medicare members.
At present, pharmacy-benefit managers that run Medicare prescription plans, such as CVS Health (CVS) -), Humana (HUM) -) and UnitedHealth (UNH) -), negotiate rebates from drugmakers they say are used to lower premium costs.
“For far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs," Health and Human Services Secretary Xavier Becerra said.
"But thanks to the landmark Inflation Reduction Act, we are closer to reaching President Biden’s goal of increasing availability and lowering prescription drug costs for all Americans.”
“Although drug companies are attempting to block Medicare from being able to negotiate for better drug prices, we will not be deterred," Becerra added. "The Biden-Harris administration will continue working to ensure that Americans with Medicare have access to innovative, life-saving treatments at lower costs.”
HHS said Eliquis, a blood-thinning treatment made by Bristol Myers (BMY) -) that generated $11.8 billion in sales last year, was named as one of the first 10 drugs that will be subject to direct negotiation. The list also included Januvia, a diabetes drug made by Merck & Co. (MRK) -), and Imbruvica, a leukemia treatment made by AbbVie (ABBV) -).
Pfizer (PFE) -) and Johnson & Johnson (JNJ) -) treatments will also be affected by the price negotiation changes.
While the names of the drugs that will be targeted will be published today, the move won't take effect until 2026. Officials say the program will save taxpayers $25 billion a year by 2031.
A dissenting view of the Medicare drug program
Not everyone is pleased about the program.
"While some provisions of the Inflation Reduction Act are likely to strengthen Part D and address some of the affordability challenges patients face, the law’s price-setting provisions threaten access to medicines," the PhRMA lobbying group, which is challenging the Biden administration in court, said in a recent blogpost.
"Yes, the IRA took important steps to lower out-of-pocket costs in Part D," PhRMA said. "But the law failed to rein in the insurers and [pharmacy-benefit managers] administering Part D plans who are leaving patients with higher costs and less access to medicines."
President Biden is expected to make a statement at the White House, alongside Vice President Kamala Harris, after the drug pricing target announcement.
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