All ten drugmakers chosen for the first round of Medicare drug price negotiations have agreed to take part in the talks, despite some previously filing lawsuits to stop the process. The negotiations, which aim to make costly medications more affordable for older Americans, were made possible by President Joe Biden’s Inflation Reduction Act. The negotiation process is expected to conclude in August 2024, with reduced prices going into effect in January 2026. The drugmakers will now submit economic and market information on their drugs, including research and development costs and sales and revenue data.
The ten drugs and their respective manufacturers for the negotiations include Eliquis by Bristol Myers Squibb, Jardiance by Boehringer Ingelheim, Xarelto by Johnson & Johnson, Januvia by Merck, Farxiga by AstraZeneca, Entresto by Novartis, Enbrel by Amgen, Imbruvica by AbbVie, Stelara by Janssen (a subsidiary of J&J), and Fiasp and NovoLog by Novo Nordisk. If the drugmakers had chosen not to engage in the negotiations, they could have faced penalties such as an excise tax of up to 95% of their medication’s U.S. sales or the removal of their products from the Medicare and Medicaid markets. The drugmakers argue that they had no real choice but to participate, fearing the potential financial consequences.
The negotiations will involve multiple rounds, with the first round ending in August 2024. CMS will then publish the agreed-upon prices on September 1, 2024, and the reduced prices will take effect from January 1, 2026. After the initial round, CMS will continue negotiating prices for more drugs in the following years. By 2029, it is expected that 20 medications will be negotiated each year. The drug price talks are estimated to save Medicare approximately $98.5 billion over a decade, and they are also expected to reduce out-of-pocket costs for Medicare enrollees who struggle to afford their prescription medications.
