Medicare Price Negotiation: Ten Drugs That Made the List, and Ten That Should Have

[Celerity]

Advocates were thrilled that Medicare will negotiate the price of several insulins. But other high-profit drugs are protected by the new program’s rules.

https://prospect.org/health/2023-08-30-medicare-price-negotiation-first-ten-drugs/

Anticipation was so high in some circles for the announcement of the first ten drugs selected for Medicare price negotiation under the Inflation Reduction Act that West Virginia University law professor and former patent inspector Sean Tu and 48 fellow pharma policy nerds participated in a March Madness–style betting pool, to guess the therapeutics that would make the list. No one got a perfect bracket, but “one guy at the Harvard Kennedy School got a nine out of ten,” said Tu, who “along with most of my colleagues” correctly predicted seven out of the ten drugs chosen, mostly on the basis of which pharma companies have preemptively sued the government to throw out the price negotiation program as unconstitutional.

Indeed, seven of the ten drugs selected are produced in part or in full by companies that are in active litigation with the government. The other three drugs are made by Amgen, Novartis, and Novo Nordisk, all members of the Pharmaceutical Research and Manufacturers of America (PhRMA), which separately sued to block the program. Four of the top five are made by either Merck or Johnson & Johnson, both of which have alleged that the IRA violates their First Amendment rights by forcing drug companies, in Merck’s phrasing, “to smile, play along, and pretend it is all part of a ‘fair’ and voluntary exchange.” (Tu and a colleague assess the merit of this argument in a brief paper published today in The Journal of the American Medical Association.)

The dominant companies appear to know what’s at stake for the United States initiating its first direct drug price negotiation program, even if tangible results are years off. Under the excessively long process, prices on the initial ten drugs, which accounted for $50.5 billion in Part D spending over a 12-month period ending in May, will not see any reductions until 2026. Another 15 drugs will be negotiated in 2027 and in 2028, and 20 each year after that. Moreover, several of the most exorbitantly priced drugs aren’t even eligible for negotiation, at least not yet. And as the Prospect reported in May, the Centers for Medicare & Medicaid Services has proposed to use prices from the current high-cost system as a baseline for the new negotiated rates, a circular method that could lead to an unsatisfying conclusion.

So Tuesday’s announcement should be seen as really just the embryonic beginning of giving the government’s main bulk prescription drug purchaser a modicum of leverage over how much it pays. In many ways, Tu says, the law simply restores the industry pricing norms that reigned before the rise of so-called “continuation patents” and other forms of abuse began doubling and tripling the life expectancies of traditional patent protections. But the pharma industry is so beet-red about forsaking even one dollar of profit that it feels like a victory, something the Biden administration is relishing. “There are hallmarks of ‘I welcome their hatred,’” said drug price reform advocate Alex Lawson of Social Security Works, referring to Franklin Roosevelt’s speech about large banks and speculators in his 1936 re-election campaign. “[Biden] understands fighting with pharma is a winner,” Lawson said. “And if they’re fighting back, people know you’re fighting for them.”

snip

[leftstreet]

1. It should be regulation, not negotiation

but a win is a win

[riversedge]

2. .................will not see any reductions until 2026.

Under the excessively long process, prices on the initial ten drugs, which accounted for $50.5 billion in Part D spending over a 12-month period ending in May, will not see any reductions until 2026. Another 15 drugs will be negotiated in 2027 and in 2028, and 20 each year after that. Moreover, several of the most exorbitantly priced drugs aren’t even eligible for negotiation, at least not yet.

[Celerity]

3. +1