On Tuesday morning, the Biden administration released the following list. First 10 Part D Drugs Subject to “negotiation” by the Centers for Medicare and Medicaid Services (CMS). This is a big deal, so let’s talk about it.
a a little background: The Reinforced Inflation Act (IRA), passed in 2022, introduced a price control system (described in the law as “negotiate”) for Medicare. The program provides a “maximum fair price” (MFP), or Medicare’s desired Start by setting as high a price as possible. Spending. Depending on how long the drug has been on the market, the MFP can be 40-75 percent of the non-federal Average Manufacturer Price (AMP), with larger discounts for longer-lived drugs. Manufacturers can offer a counteroffer, but if they don’t, they’ll end up with a 95 percent excise tax or be forced to remove the drug from Medicare coverage.
CMS selected Eliquis, Jardiance, Xarelto, Januvia, Fasiga, Entresto, Enbrel, Imbruvica, Stelara, and several variants of injectable insulin as the 10 drugs to be negotiated. Stroke prevention drug Eliquis is by a wide margin “most expensive,” apparently costing CMS about $16.5 billion for use by about 3.7 million Part D enrollees. However, Eliquis didn’t actually cost much to Medicare. CMS decides to use Total Part D gross Covered prescription drug costs from June 2022 to May 2023. it is important to note gross The cost is the cost of Medicare in front Standard rebates apply. Net The cost would probably have been much lower. Use Bristol-Meyers Squib’s (BMS, makers of Eliquis) to do some very rough back calculations 10,000 formsMedicare Eliquis spending accounted for 23.7 percent of total BMS sales, and BMS Medicare and Medicaid rebates totaled $11.3 billion, with Medicare’s share of BMS rebates roughly equal to Medicare’s share of total sales. Hypothetically, the author estimates that BMS: Medicare will pay Eliquis at least $2.9 billion in kickbacks in 2022. For context, we estimate that BMS made only $1.85 billion in profits from Eliquis from Medicare. Considering the number of Part D users, we estimate a benefit of $500 per patient in stroke prevention.In contrast, the cost of stroke is total mean $44,929 for Medicare and beneficiaries.
Exact numbers are not important. It’s just that focusing on total spending is a flawed metric. We don’t know the actual spending on Medicare medicines, and we don’t know the value of that spending. CMS has a net spending figure that takes into account all kickbacks and other clawbacks, and Congress needs to get those numbers to get a better picture of what these drugs really cost. It is tempting to suspect that CMS factored total spending into its calculations for purely political purposes. After all, higher numbers always produce bigger headlines.
Ultimately, whether CMS uses gross or net spending is of little importance compared to the IRA’s overall cost to a country’s physical and financial health. Price controls in Medicare mean higher costs in the private market as drug companies try to recoup losses, perhaps through lower rebates. Additionally, the IRA’s inflation penalty means higher list prices at launch, and consumers may see a higher premium. and The out-of-pocket cost at the pharmacy counter will be higher. Worse, the evidence-based the study Researchers at the University of Chicago predicted that the impact of the price control regime would be $663 billion in reduced R&D spending, resulting in 135 fewer new drugs and 331.5 million years of lost life expectancy in the United States. I’m here. 2039. Terrible indeed.
