Why it matters: Price quotes start negotiations.
The drugs selected for negotiations are taken by millions of older Americans to treat conditions such as diabetes, cancer and heart failure. The government identified them in August, starting a lengthy process aimed at reaching an agreed price that would take effect in 2026, provided the negotiating program survives legal challenges.
The initial round of price quotes is a key step in the negotiation process. Each pharmacist has until early March to accept the offer or propose a counteroffer to the government. A series of negotiating sessions could follow, with the process being completed by August.
Health policy experts said the announcement of the initial round of bids amounted to a sort of starting gun, giving the Biden administration a chance to take an aggressive stance and test pharma’s willingness to comply.
The proposals help “set the tone for the rest of this back and forth,” said Andrew W. Mulcahy, a health economist at the RAND Corporation who has advised the Biden administration on the implementation of the drug price negotiations.
Drugs subject to price debate include Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica and Stelara. Fiasp and NovoLog insulin products were also selected. The administration has not publicly disclosed how much it offered for the drugs, which are covered by Medicare’s take-home prescription drug program, known as Medicare Part D.
What happens next: Courts still have to weigh in.
The price negotiation program was created by the Inflation Reduction, Climate, Taxation and Health Care Act that President Biden signed into law in 2022. Additional drugs will be selected for price negotiations in the coming years. The program is expected to save the federal government nearly $100 billion over a decade.
The price negotiation program is a key component of the White House’s efforts to lower everyday costs for Americans and is a policy that Mr. Biden may point to as he campaigns for re-election.
“Medicare is no longer getting the prices for these drugs that drug companies demand,” Mr. Biden said in a statement on Thursday.
But the drug industry hopes the courts will step in to shut down the program, which pharmacists say is unconstitutional. The industry has long argued that allowing the government to negotiate prices would limit private innovation and discourage companies from developing new drugs.
“This continues to be an exercise in scoring political points on the campaign trail rather than doing what is in the best interest of patients,” Alex Schriver, senior vice president at Pharmaceutical Research and Manufacturers of America, or PhRMA, said in a statement. . “Government bureaucrats operate behind closed doors to set drug prices without disclosing for months how they arrived at the price or how much patient and provider input was used.”
Lawsuits filed by pharmacists, PhRMA and the US Chamber of Commerce remain ongoing in courts across the country. A federal judge in Delaware heard arguments Wednesday in a case brought by AstraZeneca, the maker of one of the drugs selected for negotiations, Farxiga, a treatment for diabetes, heart failure and chronic kidney disease.
