Making a Deal: Medicare Kicks Off Drug Price Negotiations

What’s next for program targeting high-use prescription drugs

February 01, 2024

The federal government is sending price offers to the drug companies participating in the first cycle of Medicare’s Drug Price Negotiation Program.

Last August, the Biden administration announced the first 10 drugs selected for the new program, which aims to help control the costs of widely prescribed, single-source products with no generic alternatives. The program is one of the staples of the administration’s Inflation Reduction Act to help curb the price of prescription drugs.

“Today is another milestone on the march to ensure people with Medicare get fair prices for prescription drugs,”  Xavier Becerra, secretary for the U.S. Department of Health and Human Services, said in a statement.

Here’s what you need to know:

• Background:  The first selected products are Eliquis (blood clotting), Jardiance (diabetes), Xarelto (blood clotting), Januvia (diabetes), Farxiga (diabetes), Entresto (heart failure), Enbrel (autoimmune diseases), Imbruvica (blood cancers), Stelara (Crohn’s disease), and NovoLog (diabetes).
  • The 10 companies have agreed to participate in the negotiations, but some of the manufacturers have pursued legal action to stop the program from advancing.
• Price uncertainty:  CMS officials did not disclose the “maximum fair price” it offered to the respective drug companies, but the initial offers will set off a back and forth in the coming months.
• Next steps:  The manufacturers are expected to respond in 30 days, with negotiations ending August 1.
  • If the government and the participating manufacturers reach agreement on their respective drugs, the new Medicare prices will take effect in 2026.
• Key stat:  For every dollar paid in other countries for drugs, U.S. consumers pay $2.78, according to a new report from the Office of the Assistant Secretary for Planning and Evaluation.

“Throughout the negotiation process, CMS is dedicated to improving access to some of the most expensive drugs for people with Medicare while encouraging market competition and fostering innovation,” CMS Administrator Chiquita Brooks-LaSure said in a statement.

Additional information about the timeline for Medicare’s Drug Price Negotiation Program is available online.