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10 PRESCRIPTION DRUGS MEDICARE IS NEGOTIATING FIRST
GOVERNMENT PURSUES LOWER PRICES FOR BLOOD THINNERS, DIABETES MEDICATIONS AND
CANCER TREATMENTS
--------------------------------------------------------------------------------
By
Dena Bunis and Rachel Nania,
AARP
140 Comments
En español
Published August 29, 2023
/ Updated April 03, 2024
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The conversation continues between Medicare and the makers of the first 10
prescription drugs whose prices the federal government has the power to
negotiate for the first time in history.
Included in this first batch of medications whose prices are being negotiated as
part of the new prescription drug law are life-sustaining therapies that
millions of older Americans in the nation’s largest health program rely upon to
prevent strokes and blood clots and to treat diabetes and cancer.
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The U.S. Department of Health and Human Services (HHS), which started price
negotiations with drug manufacturers in February, has received counteroffers to
its initial proposals and has invited all 10 of the drugmakers to “participate
in further discussions.”
Negotiations are expected to continue over the next few months and are scheduled
to conclude in August. New prices for those medications agreed to by the federal
government and the drugmakers will take effect in 2026.
“This is an important first step toward finally allowing Medicare to use its
purchasing power to lower drug prices,” Nancy LeaMond, AARP executive vice
president and chief advocacy and engagement officer, said when the 10 first
drugs were announced in August. “Medicare spends more than $135 billion on
prescription drugs every year.”
Between June 2022 and May 2023, Medicare Part D spent $50 billion on the first
10 drugs selected for negotiation. That represents 20 percent of Part D spending
during that time period. These medications were used by 8.2 million Medicare
beneficiaries.
In the long run, Medicare beneficiaries, who often must pay a percentage of a
drug’s cost, would benefit directly from lower negotiated prices, and the
government could use the money saved to shore up Medicare’s finances.
Negotiations will be expanded to include additional drugs in the years ahead,
which will magnify the savings. Lower Medicare spending is also expected to lead
to lower Part D premiums.
“Letting Medicare negotiate for lower prices is a commonsense solution that will
save seniors money and cut government overspending,” LeaMond says.
HOW THE DRUGS WERE PICKED
Under the Inflation Reduction Act, the government was required to make public by
Sept. 1, 2023, the 10 medications covered by Medicare Part D that comprise the
first round of the price negotiation process.
To be eligible for negotiation, medicines that are called small molecule drugs —
those you typically get at the pharmacy and take in pill form — must have been
on the market for seven years and not have a generic alternative. Biologics,
which are drugs made from living organisms rather than chemicals, must have been
available for 11 years with no nearly identical alternatives, known as
biosimilars, on the market.
Federal officials drew the list of 10 drugs from among the 50 medications that
Medicare Part D spends the most on and that are used most by beneficiaries. All
but three are small molecule medicines. Drugmakers that decline to negotiate
prices face substantial financial penalties or must stop participating in
Medicare and Medicaid, the health coverage program for people with low incomes.
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A LONG TIME COMING
David Mitchell, founder of Patients for Affordable Drugs Now, has been fighting
for lower prescription drug prices for years. Mitchell has an incurable blood
cancer, and the drugs he takes carry a combined annual price of almost $1
million. Mitchell’s copays are based on those high prices. One of his drugs,
Eliquis, is on the list of drugs being negotiated.
Price negotiations and the other reforms in the new law, Mitchell says, “will
improve both the financial well-being and the health of people, more of whom are
going to be able to afford to buy and take the drugs they need.”
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When Congress first added a prescription drug benefit to Medicare nearly two
decades ago, the law explicitly forbade the program to negotiate drug prices
with pharmaceutical companies. AARP has been one of the most outspoken advocates
for changing that policy. “Medicare negotiates a lot of different services that
it covers, and prescription drugs were not a part of that until now,” says Leigh
Purvis, AARP’s prescription drug policy principal. “Medicare has tens of
millions of beneficiaries and brings a lot of bargaining power to the table and
will be able to get better prices for people who are taking these drugs.”
Nearly 52 million Medicare beneficiaries are either enrolled in a Part D
prescription drug plan or get drug coverage through their Medicare Advantage
plan.
AARP officials Nancy LeaMond, executive vice president and chief advocacy and
engagement officer; Leigh Purvis, prescription drug policy principal; Bill
Sweeney, senior vice president for government affairs; and Megan O’Reilly, vice
president for health and family, attend a White House event to celebrate the
release of the first 10 Medicare drugs whose prices will be negotiated with
manufacturers.
Rhett Buttle
PATIENTS ALREADY BENEFITING FROM THE NEW LAW
While Medicare enrollees will not feel the first effects of negotiated drug
prices until 2026, experts point to several other provisions of the new law that
are already beginning to save beneficiaries money. Plus, other cost-saving
provisions will be rolled out between now and when the negotiated prices kick
in. The money the Medicare program saves through those lower prices will enable
the program to pay for the provisions that are cutting out-of-pocket costs for
beneficiaries.
For example, the $35 cap for Medicare beneficiaries on monthly copays for
insulin took effect in 2023, as did free vaccines, including the shingles shot.
Another provision that started last year requires drugmakers to pay rebates to
Medicare for drugs whose prices increased more than the rate of inflation.
In 2024, beneficiaries with high drug expenses are getting a break from paying
any out-of-pocket costs once they reach the so-called catastrophic phase of the
Part D prescription drug benefit.
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And in 2025, enrollees who either have a stand-alone Part D drug plan or whose
prescriptions are covered by their Medicare Advantage plan will see their annual
out-of-pocket costs capped at $2,000.
“Collectively, these policies will help lower costs for people on Medicare until
the negotiations provision takes effect in 2026,” says Tricia Neuman, senior
vice president and head of the Medicare program at KFF, formerly the Kaiser
Family Foundation.
OVERWHELMING SUPPORT FOR DRUG NEGOTIATIONS
For years, polls have shown overwhelming public support for allowing Medicare to
negotiate prices. A 2021 KFF public opinion survey found that 83 percent of
Americans favored allowing Medicare to negotiate drug prices.
That support crossed party lines, with 92 percent of Democrats, 85 percent of
independents and 76 percent of Republicans in favor of price negotiations.
A 2022 AARP poll found that 89 percent of voters in the most competitive
congressional districts would be more likely to vote for a candidate who backed
drug negotiations.
The impact of this new policy will go beyond the savings to Medicare
beneficiaries who take the 10 drugs on the initial negotiations list. Medicare
is scheduled to choose 15 additional drugs for negotiations, with prices to take
effect in 2027, another 15 in 2028 and 20 more medications annually starting in
2029.
“People are feeling the effects of high prescription drug prices through higher
premiums and cost sharing, even if you aren’t taking the drugs yourself,” Purvis
says. Lower prices for consumers also mean that the Medicare program will save
money. The nonpartisan Congressional Budget Office has estimated that the
negotiations provision of the new law will save Medicare $98.5 billion over 10
years.
Big drug companies fought against this provision and continue to oppose it.
Manufacturers as well as several business groups have filed lawsuits in federal
courts across the country in an attempt to derail the negotiation process. AARP
and AARP Foundation recently filed a friend of the court legal brief urging a
federal judge in Ohio to deny a request by several chambers of commerce that the
negotiations process be delayed.
TIMETABLE FOR MEDICARE PRESCRIPTION DRUG PRICE NEGOTIATIONS
* Aug. 29, 2023: The Centers for Medicare & Medicaid Services makes public the
list of the 10 Medicare Part D drugs whose prices will be negotiated for
2026.
* Oct. 1, 2023: Deadline for manufacturers of those 10 drugs to agree to
participate in the negotiation process or face penalties.
* Oct. 2, 2023: Deadline for the drugmakers of the 10 medications to provide
CMS with the data it needs to determine a “maximum fair price.”
* Feb. 1, 2024: The negotiation period begins as CMS provides the drugmakers
with its initial maximum fair price offer.
* March 2, 2024: Drugmakers have 30 days to accept the CMS price offer or
propose another price.
* Aug. 1, 2024: Negotiation period ends.
* Sept. 1, 2024: CMS will publish the list of maximum fair prices.
* Jan. 1, 2026: Maximum fair prices take effect for the first 10 drugs.
* 2027: Negotiated prices for 15 additional drugs take effect.
* 2028: Negotiated prices for another 15 drugs take effect.
* 2029 and beyond: Negotiated prices for 20 additional drugs per year take
effect.
Editor's note: This story, originally published in August 2023, has been updated
with new information.
%{postComment}%
Dena Bunis covered Medicare, health care, health policy and Congress. She also
wrote the Medicare Made Easy column for the AARP Bulletin. An award-winning
journalist, Bunis spent decades working for metropolitan daily newspapers,
including as Washington bureau chief for the Orange County Register and as a
health policy and workplace writer for Newsday. She died in March.
Rachel Nania is an award-winning health editor and writer at aarp.org who covers
a range of topics including diseases and treatments.
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10% off dine-in or curbside carryout orders placed by phone
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MEMBERS ONLY
Home & Real Estate
ADT™ Home Security
Savings on monthly home security monitoring
Learn More
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Health & Wellness
AARP® Staying Sharp®
Activities, recipes, challenges and more with full access to AARP Staying Sharp®
Learn More
See more Health & Wellness offers >
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234
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* MEMBERS ONLY
Restaurants
Carrabba's Italian Grill®
10% off dine-in or curbside carryout orders placed by phone
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* MEMBERS ONLY
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* MEMBERS ONLY
Home & Real Estate
ADT™ Home Security
Savings on monthly home security monitoring
Learn More
See more Home & Real Estate offers >
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* Health & Wellness
AARP® Staying Sharp®
Activities, recipes, challenges and more with full access to AARP Staying
Sharp®
Learn More
See more Health & Wellness offers >
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