In a significant development, all 10 pharmaceutical companies whose products were chosen for the initial round of Medicare drug price negotiations have agreed to participate in the talks, as announced by the Department of Health and Human Services (HHS) on Tuesday.
These companies include Boehringer Ingelheim, Johnson & Johnson (J&J), Merck, Novartis, Immunex, Novo Nordisk, AstraZeneca, and Bristol Myers Squibb. Notably, some of these pharmaceutical giants had initially expressed strong opposition to the Inflation Reduction Act (IRA) and filed lawsuits against the program.
With the participation of all 10 companies now confirmed, the Centers for Medicare and Medicaid Services (CMS) can proceed with the negotiation process. These negotiations are slated to continue throughout the remainder of this year and into 2024, as per the HHS announcement.
CMS has plans to conduct listening sessions this fall, engaging with patients, beneficiaries, consumer advocacy organizations, caregivers, and other stakeholders. Additionally, the agency will hold meetings with pharmaceutical companies to discuss previous submissions that will be taken into account when determining a maximum fair price.
By February 1, 2024, CMS will present its initial offer for the selected pharmaceutical products, along with a concise justification for the maximum fair price. Companies will then have a month to either accept CMS’s pricing or propose a counteroffer.
The negotiation period is set to run until August 1, 2024, and by September 1 of the same year, CMS will publish the final maximum fair prices for the selected drugs. These new pricing terms will come into effect in 2026.
In determining its offer, CMS will consider various factors, including the clinical benefit of the selected drug, its role in fulfilling unmet medical needs, and its impact on Medicare beneficiaries. Additionally, the agency will take into account research and development costs, as well as production and distribution expenses.
The Inflation Reduction Act (IRA), enacted in August 2022, aims to save the U.S. government approximately $25 billion in drug spending over the next eight years. It empowers CMS to renegotiate prices for some of the most widely prescribed medications.
In August 2023, CMS unveiled the first 10 drugs selected for negotiations, which include treatments for type 2 diabetes, heart failure, blood thinning, and psoriasis, among others.
These selected drugs collectively account for a substantial portion of total Part D gross covered prescription drug costs, making them a focal point of efforts to control healthcare expenses and make essential medications more affordable.