Medicare drug prices may soon drop significantly

More than a decade after the Democrats first made the proposal, Medicare will finally be the subject of price negotiations for some prescription drugs. The edition told in more detail Vox.

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The federal government has announced 10 drugs that will be included in the first round of negotiations. The new prices will come into effect in 2026.

The list of 10 drugs is very diverse. Some of them take millions of people, and their cost is no more than a thousand dollars a year. Others cost upwards of six figures a year and are treated by far fewer patients. Taken together, this list reflects the many ways in which high drug prices put pressure on both patients and insurers and increase the risk that people will not be able to access the medicines they need.

Even if you are not taking any of these drugs, negotiating should help you if you are in Medicare. Congress used an estimated savings of $99 billion over 10 years to cap annual drug costs at $2 for all Medicare beneficiaries.

“Everyone will benefit from this,” said Stacey Dusetsina, a health policy professor at Vanderbilt University who sits on the program’s congressional advisory board.

The Negotiation Plan is a milestone for the US healthcare system. The federal government's largest (by spending) health care project is using its enormous leverage to try to stop the high prices charged by drug manufacturers for their products.

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The United States pays far more for prescription drugs than any other country in the world. However, compared to other health care systems, the US government has limited ability to cut prices. However, a new program created under the Inflation Reduction Act (IRA) gives Medicare a powerful new tool.

How everything will happen:

1. Drug manufacturers must sign a negotiation agreement within one month and provide data that Medicare will take into account when determining the contract price.
2. By February 1, 2024, Medicare will offer its original price for selected drugs, after which manufacturers will have a month to accept or provide a counteroffer.
3. In the spring and summer of next year it will be possible to hold negotiations. Then in September 2024, Medicare will announce the final prices. The program will begin paying these prices in 2026.

The process will start all over again when Medicare announces 2025 more drugs to negotiate in February 15, with prices going into effect in 2027. In each subsequent year, new drugs will be added to the negotiation program.

This will happen if the courts allow negotiations to continue. The pharmaceutical industry has already filed a number of lawsuits, each with its own legal basis, to stop the program before it even starts.

Many legal experts believe that these lawsuits will not succeed. However, decisions in these cases will ultimately determine whether Medicare drug negotiations are allowed to test their money-saving potential for American patients.

In the meantime, the drugs that Medicare plans to negotiate can be divided into two groups.

1. Quite expensive drugs for the treatment of chronic diseases that are taken by hundreds of thousands and even millions of people

Seven of the 10 drugs announced for negotiation fall into this category:

• Eliquis, which treats and prevents blood clots ($561 for a one-month supply);
• Jardiance, which treats diabetes and heart failure ($570);
• Xarelto, which treats and prevents blood clots and reduces the associated risks for people with cardiovascular disease ($542);
• Januvia - a drug for the treatment of diabetes ($586);
• Farxiga - a drug for the treatment of diabetes, cardiovascular diseases and chronic kidney disease ($549);
• Entresto - a drug for the treatment of heart failure ($545);
• Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen and NovoLog PenFill are a class of insulin injectors and products for refilling them.

What these drugs have in common is that a large number of Americans take them, which means that diabetes and cardiovascular disease are among the most common chronic diseases in the US, and they should take them regularly.

From June 2022 to May 2023, over 580 Medicare people took Entresto; over 1 million people have been appointed by Xarelto and Jardiance. Eliquis was the most commonly used drug on the list, with more than 3,7 million people taking it. Its cost to Medicare during this period was about $16,5 billion.

Even if most Medicare beneficiaries do not pay the list price, it can still affect the cost they pay.

These drugs help people manage chronic conditions to avoid more costly health problems in the future.

The consequences can be severe if people are forced to stop taking medication because of the cost. In particular, insulin has become such a drug that it can reduce its effectiveness in the long term, and in some individual cases this has led to serious emergencies, even death of patients.

The IRA includes a provision to cap the monthly cost of insulin at $35 for Medicare patients, among other things. Studies have shown that even an extra $10 is fraught with the fact that people will take less of the medicines they need.

Negotiating Medicare won't solve all of these problems, but it will save money for patients and the program, and the IRA uses these government savings to cap the cost of drugs for older people in the program.

2. Overpriced drugs for people with serious, potentially life-threatening conditions

The second group of drugs being negotiated with Medicare are being taken by far fewer people, but for those who need them, being able to get them could determine whether they live or die in the very near future:

• Enbrel, which treats rheumatoid arthritis, psoriasis, and psoriatic arthritis ($1 for a weekly dose);
• Imbruvica, which treats various types of blood cancer ($13 for a one-month course);
• Stelara is a drug for the treatment of psoriasis, psoriatic arthritis, Crohn's disease and inflammatory bowel disease ($25 for an 497-week supply).

The number of Medicare-affected patients ranges from about 20 for Stelara and Imbruvica to nearly 50 for Enbrel. However, between June 2022 and May 2023, the cost of these drugs to Medicare is more than $2,6 billion.

These patients will especially benefit from the agreed prices and the new spending cap set by Congress, Dusettsina said. Under the old Medicare system, they could spend up to $10 a year on drugs. Now their expenses will not exceed $000 per year.

Therein lies the tragedy of the American drug price crisis. The pharmaceutical industry has developed and produced wonderful drugs that can stop cancer or help people live with diseases that would otherwise be debilitating.

But all too often these treatments cost patients a sum they either cannot afford, or health insurance companies are forced to raise premiums to cover the costs, or both.

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The affordability crisis is exacerbated by the infamous generosity of health insurance and the carte blanche given to drug companies to charge any list price as long as their products are patented.

Dusetcina said she wouldn't be surprised if the next drug list featured the most expensive drugs for serious acute conditions such as cancer, given that relatively inexpensive drugs for chronic diseases rank higher in the original list.

Historically, drug manufacturers have argued that insurance companies will cut the price of these drugs and no one will have to pay for them. They even said that in Medicare, various private Part D plans are already negotiating prices on behalf of their patients.

Yes, it is true, but it has prevented Medicare from using all its leverage to lower prices for everyone, because each Part D plan represents a smaller number of people than Medicare as a whole. There are over 800 Part D plans. Now, finally, things are about to change.

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