The Biden administration has recently disclosed a slate of prescription drugs that will be subject to Medicare negotiations, representing the administration’s first tangible steps to bring down the cost of medications. Pharmaceutical titans such as Pfizer Inc., Bristol-Myers Squibb Co., and Eli Lilly & Co. find themselves in the crosshairs.
Tuesday’s announcement included the names of 10 medications which will be open to the bargaining power of Medicare, the U.S. health program covering about 65 million senior citizens. Potential price reductions are expected to average around 50%, with the first reductions taking effect in 2026.
Included on the list are Eliquis, the high-priced blood thinner produced by Bristol and Pfizer which cost Medicare $12.6 billion, Lilly’s type 2 diabetes pill Jardiance, and Johnson & Johnson’s blood thinner Xarelto.
Prior to the Biden administration’s efforts, the government’s ability to negotiate drug prices had been prohibited by the law that established Medicare’s Part D program in 2003. However, due to public outrage over the highest medicine costs in the world, the Inflation Reduction Act was signed into law in 2022, allowing these negotiations to take place.
Other notable drugs to be negotiated by 2026 include AbbVie Inc.’s leukemia drug Imbruvica, Amgen Inc.’s rheumatoid arthritis drug Enbrel, Merck & Co.’s diabetes drug Januvia, Novartis AG’s heart medication Entresto, Novo Nordisk A/S’s insulin NovoLog, AstraZeneca Plc’s heart failure medicine Farxiga, and Johnson & Johnson’s immune drug Stelara.
These medications represented almost $51 billion, or roughly 20%, of Part D’s prescription drug expenses in the year ending May 31, 2022. The implications of these negotiations could result in significant savings for both Medicare and its beneficiaries.
More information about this topic is available on the Bloomberg website.