The Centers for Medicare and Medicaid Services (CMS) recently published the list of 10 drug and biologic products (download the list) that are subject to the first year of Medicare price negotiations under the Inflation Reduction Act.
The Inflation Reduction Act of 2022 (IRA) had many provisions only indirectly related to inflation, including important changes to Medicare. The IRA allows CMS to negotiate the price of the 10 costliest drug and biologic products for Medicare (measured by aggregate Medicare spending) on behalf of all Medicare beneficiaries. Though the bill was passed in 2022, the negotiated prices do not take effect until 2026.
There are many exemptions that exclude products from negotiation.
- Eligible products must be on the market for a specific period of time and have no significant generic alternative.
- Once a product is on the negotiation list, it remains on the negotiation list in perpetuity.
- Each year, CMS will calculate a new list of the 10 most costly products, which will add more products to the list.
The first year only includes Medicare Part D products, but this will expand to Part B products in future years. The IRA does not apply these negotiated prices to commercial payers.
Several inhalers were widely rumored to be included on the first list, and the College had begun preparations to make comments to ensure the continued availability of those drugs. Inhalers will likely be on the list for 2024. We will carefully monitor the progress of these negotiations to be prepared for the future.
The proponents of price negotiation believe this will save consumers a significant amount of money. Others are concerned about unintended consequences, including drug shortages and discontinuations. The College strongly supports affordable medications for everyone. However, we also understand the important role that drug research and development plays in the health of Americans.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) dramatically reduced profits for many Part-B physician-administered medicines but led to shortages of many drugs because they were priced at or near production prices, meaning little profit for the drug makers. The IRA’s price-control provisions – which are currently structured more as a price-setting process than a true negotiation – could place the value of drugs at or near production costs and could lead to similar shortages.
CMS is aware of these concerns and is soliciting input from the public as part of the process of determining the value of these drugs. In particular, CMS wants to know:
- What is it like to live with the specific disease the drug is designed to treat?
- What is it like to take the medication?
- What is the “patient journey”?
- How is this medicine valuable and unique compared to competitors?
Comments are due by Oct. 3, 2023. While many are concerned about the unintended consequences of this law, the true impact is not likely to be known for several years.
Below is the first list of 10 products that CMS determined are subject to negotiation. While none of the medications allergists typically provide made this year’s list, we expect certain asthma medications will be added to the list in future years.
|Drug Name||Commonly Treated Conditions||Total Part D Gross Covered Prescription Drug Costs from June 2022-May 2023||Number of Medicare Part D Enrollees Who Used the Drug from June 2022-May 2023|
|Eliquis||Prevention and treatment of blood clots||$16,482,621,000||3,706,000|
|Jardiance||Diabetes; Heart failure||$7,057,707,000||1,573,000|
|Xarelto||Prevention and treatment of blood clots; Reduction of risk for patients with coronary or peripheral artery disease||$6,031,393,000||1,337,000|
|Farxiga||Diabetes; Heart failure; Chronic kidney disease||$3,268,329,000||799,000|
|Enbrel||Rheumatoid arthritis; Psoriasis; Psoriatic arthritis||$2,791,105,000||48,000|
|Stelara||Psoriasis; Psoriatic arthritis; Crohn’s disease; Ulcerative colitis||$2,638,929,000||22,000|
|Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill||Diabetes||$2,576,586,000||777,000|
|Note: Numbers are rounded to the nearest thousands.
For the time period between June 1, 2022 and May 31, 2023, which is the time period used to determine which drugs were eligible for negotiation, about 8,247,000 people with Medicare Part D coverage used these drugs to treat a variety of conditions, such as cardiovascular disease, diabetes, autoimmune diseases, and cancer. These selected drugs accounted for $50.5 billion in total Part D gross covered prescription drug costs, or about 20% of total Part D gross covered prescription drug costs during that time period.
Source: Centers for Medicare & Medicaid Services, Factsheet: Medicare Drug Price Negotiation Program
The Advocacy Council – ADVOCATING FOR ALLERGISTS AND THEIR PATIENTS.