Negotiations to start later this year on cutting pricey Medicare prescription costs


Patient advocates are watching to see which pharmaceutical products will be on the list of medications for federal officials to target when they open negotiations later this year with drug manufacturers over the price of prescriptions. 

A new federal law clearing the way for administrators of the federal Medicare program to negotiate the price of prescription drugs formally takes effect in September. That first round will focus on 10 drugs, selected by the Centers for Medicare & Medicaid Services (CMS) at the U.S. Department of Health and Human Services for being the most costly and the most widely used.

In addition to being expensive, the drugs that will be subject to the negotiation requirement have no competition, either from a generic drug or from a different drug that works similarly, according to a CMS fact sheet.

The negotiations will take place over the course of 2024 and 2025, with the negotiated prices taking effect Jan. 1, 2026.

“Some of these drugs are just so expensive that it has an impact on people, even people who are middle class and upper middle class,” said U.S. Rep. Gwen Moore (D-Milwaukee) in an online news conference last week organized by Protect Our Care, an advocacy group for health insurance access.

Moore cited Imbruvica, a medication she went on in 2018 after a cancer diagnosis. At its list price, Imbruvica carries a price tag of $197,500 a year, Moore said, adding, “That’s more costly than most people can afford.”

The ability for Medicare to begin negotiating the price of a limited group of prescription drugs was wrapped into the Inflation Reduction Act, which passed Congress a year ago and was signed by President Joe Biden.

“This is just about using bulk purchasing power for a fair negotiation,” said Joe Zepecki, Wisconsin director for Protect Our Care. “But for more than 30 years, there was a prohibition saying, ‘Medicare, you cannot go and try to even get a better deal.’ That was bananas.”

Republicans in the U.S. House of Representatives have introduced a bill to repeal the drug price provisions in the Inflation Reduction Act, although that legislation is not expected to advance in the Senate. Drug manufacturers, a pharmaceutical industry trade group and the U.S. Chamber of Commerce are suing the federal government, claiming the negotiation provision is unconstitutional.

“These lawsuits are not related to some problem with the drug, some health risk to the drug, they are literally related to the profit that big pharma and the U.S. Chamber of Commerce anticipate that they will lose,” Moore said. 

While the list of drugs that will be addressed in the first round hasn’t been released yet, Protect Our Care produced a report in June analyzing five likely targets. The advocacy group identified the five based on the criteria for selection that are included in the new law and subsequent guidance from CMS, along with the gross spending for drugs under Medicare’s prescription drug benefit. 

In 2021, Medicare spent $16.7 billion on those five drugs alone, according to the report. In addition, the five have high list prices that have increased at rates “that far exceed inflation,” the report states. 

The list includes Imbruvica, from AbbVie, the anti-cancer medication that Moore referred to; Ibrance, an anti-cancer drug from Pfizer; Embrel, a drug from Amgen to treat arthritis and plaque psoriasis; Januvia, from Merck, a diabetes medication; and Xarelto, a blood thinner from Johnson & Johnson.

The report compares the cost of the drugs it identifies in the U.S. against their cost in other countries. For example, Xarelto has an annual list price of $6,240 in the U.S. while it costs 83% less in Canada and 50% less in France. Imbruvica’s annual cost is 50% lower in Canada and 58% lower in France. And Ibrance, priced at $181,663 annually in the U.S., is 77% cheaper in France and 66% cheaper in Canada.

In addition to the Medicare prescription drug negotiation provision, the Inflation Reduction Act put in place a $35 per month cap on the price of insulin for Medicare patients that has now taken effect. 

A third provision, putting a $2,000-per-year cap on prescription costs for Medicare participants, will take effect in 2025. Calculations released by the federal government last week indicated that nearly 300,000 Wisconsin residents covered by Medicare’s drug plan would save nearly $475 a year on average because of the cap. 

Stay Connected

Use the form below to sign up for my newsletter and get the latest news and updates directly to your inbox.