The Biden administration announced last week the first 10 prescription drugs eligible for price negotiation under the Inflation Control Act (IRA), including drugs most commonly prescribed for heart disease and diabetes. is also included.
The IRA, which Biden signed in August 2022, will give the Centers for Medicare and Medicaid Services (CMS) the ability to pay for some brand-name drugs paid by Medicare, which covers Americans over 65 and some people with disabilities. Authorized to set prices.
Pharmaceutical companies are currently Americans charge twice as much on average As residents of other wealthy countries take the same medicine. We’ll explain why and how price negotiation could change things in the future.
catch up with the rest of the world
Government price controls have effectively reduced costs in other countries.
With sales of $630 billion last year, the U.S. accounted for 42% of global drug spending and 65% of the industry’s global profits, according to The Economist.
“Prescription drug prices in the United States are on average two to three times higher than in other wealthy countries,” the magazine reports. “Patient out-of-pocket costs, the portion of drug costs not covered by insurance, are also among the highest in the world.”
That’s because until Congressional Democrats passed the IRA on a party-line vote last year, the federal government didn’t regulate or negotiate drug prices the way nearly every other country does.
for example, According to a 2019 surveyAmericans paid an average of $30,808 for a 28-day supply of the hepatitis C drug Harvoni, compared to Chileans $4,944 and Swiss $14,720. The diabetes drug Lantus cost $419 for five syringes in the United States, compared to $68 in Chile and $55 in South Africa.
what will happen from now on
CMS will work with drug companies to determine prices for nine drugs: Eliquis, Jardiance, Xarelto, Januvia, Fasiga, Entresto, Enbrel, Imbruvica, and Stelara. The 10th drug includes insulin treatments Fiasp and Novolog.
According to the Department of Health and Human Services (HHS), these drugs cost Medicare $50.5 billion in outpatient spending in the past year, about one-fifth of the program’s total prescription drug spending. do.
“These first 10 drug price reductions will go into effect in 2026, delivering savings to Medicare and, by extension, the taxpayers who fund it,” HuffPost reports. “It also means savings primarily for individual Medicare beneficiaries. Elderly people and people with disabilitiesIn the end, you will end up paying for your medication through insurance premiums or co-payments. According to HHS, these out-of-pocket costs can amount to hundreds or thousands of dollars per year per drug. “
Politico noted that “Medicare patients will see some relief on drug prices by 2026.” “Starting in 2025, another provision of the Inflation Control Act will limit beneficiaries’ Medicare Part D out-of-pocket costs to $2,000 per year.”
The IRA also requires drug companies to provide rebates to Medicare if prices rise faster than inflation. Overall, the Congressional Budget Office believes that this legislation: Save Medicare $98.5 billion Over 10 years.
An additional 30 medicines will be selected for price negotiations in 2027 and 2028. Only branded medicines with no generic versions are subject to price negotiations.
process
Pharmaceutical companies have until October 1st It is up to them to decide whether to participate in price setting, and if they refuse to do so, they face hefty fines.
If companies agree, CMS will set the asking price by February 1. The drug company then has 30 days to decide whether to accept the offer or withdraw from Medicare and Medicaid. As of March, the American population was 65.8 million. enrolled in Medicarethere were 93.8 million people enrolled in Medicaid and the Children’s Health Insurance Program (CHIP). These are very large markets to lose access to. (already Medicaid pay lower drug prices than medicare, and new price negotiations do not directly affect those prices. )
In European countries, it is very rare for a pharmaceutical company to decide not to accept the government’s price. According to JAMA Health Forum magazine.
private insurance
It is not yet clear what impact, if any, Medicare drug price reductions will have on people with insurance purchased in the private market or through their employers. Experts say prices could fall as the overall market is priced lower and private insurers cite Medicare prices as a lower benchmark. But drug companies could instead try to make up for lost profit margins by charging private insurers even more.
not that fast
Pharmaceutical companies are filed a lawsuit Try to block negotiations in court. Pharmaceutical companies argue that price limits will hinder the development of some new drugs.
“Giving a single government agency the power to arbitrarily set drug prices with little accountability, oversight, or input from patients or physicians will continue to be a serious issue long after this administration leaves.” “It will have significant negative effects,” said Stephen Uble, president and CEO of Pharmaceutical Research, the American manufacturer told USA Today.
Congressional Republicans who voted uniformly against the IRA introduced legislation that voted against the IRA. repeal Medicare authority; Drug price negotiations are required, but there is no chance of passage unless Republicans control both chambers of Congress and the White House.
