CMS announces Medicare prices for first negotiated drugs

The Biden administration announced Thursday that it had reached an agreement with drugmakers for all 10 high-priced drugs it began negotiations on earlier this year, a key step in implementing the president's drug pricing law.

The long-awaited announcement will mark the first time Medicare has set Part D prescription drug prices, as required by a law passed by Congress in 2022.

In a conference call Wednesday evening, Biden administration officials said the negotiated prices would have resulted in $6 billion in savings for Medicare if they take effect in 2023, and would save Medicare beneficiaries who pay for their prescription drugs out of pocket $1.5 billion in 2026.

Prices are valid from January 1, 2026.

President Joe Biden and Vice President Kamala Harris are expected to announce the news at an event in Prince George's County, Maryland. The announcement was timed to coincide with the second anniversary of the passage of the law allowing Medicare to negotiate drug prices.

“These are medications that millions of seniors and sick people take to treat chronic conditions such as diabetes, stroke, heart disease, chronic kidney disease and cancer,” said Health Secretary Xavier Becerra.

On Thursday morning, the Centers for Medicare and Medicaid Services released agreed prices for 30-day supplies of the 10 drugs and compared them to the drug's 2023 list price. A CMS official told reporters Thursday that it was not possible to compare the discounts to the net prices Medicare normally pays because the information was confidential.

For example, the negotiated list price for Stelara – a drug used to treat psoriasis, Crohn's disease and ulcerative colitis – is $4,695 for a 30-day supply.

The list price for the drug was $13,836 in 2023, but that amount does not take into account other discounts Part D plans could receive that year.

The Congressional Budget Office had forecast savings of around $98.5 billion by fiscal year 2031, including $3.7 billion in the first year alone.

CMS last year selected the drugs up for negotiation, including Eliquis, a Bristol Myers Squibb Co. drug used to prevent and treat blood clots that costs Medicare billions of dollars annually.

According to CMS, about 3.7 million Medicare beneficiaries take Eliquis, costing the program about $16 billion annually.

CMS negotiated a price of $231 per 30-day supply for the drug. The drug's list price was $521 in 2023.

CMS does not have to publish a statement on the maximum fair prices until March 1st.

Other drugs for which negotiated prices were agreed include Merck's diabetes drug Januvia, Novo Nordisk's diabetes drugs Fiasp and NovoLog, AstraZeneca's diabetes drug Farxiga and Immunex Corporation's rheumatoid arthritis drug Enbrel. Prices were also negotiated for Janssen's blood clot drug Xarelto, Novartis' heart failure drug Entresto and Pharmacyclics' blood cancer drug Imbruvica.

In negotiating the maximum reasonable price for the 10 drugs, CMS must consider several factors specified in the law, including evidence of therapeutic alternatives, the manufacturer's research and development costs and whether it has recouped those costs, federal financial support for the drug's discovery and development, and other information.

Negotiations with the pharmaceutical manufacturers producing the ten drugs selected for negotiation ended on August 1.

The manufacturers of the selected drugs had filed several lawsuits against the Biden administration, but were unsuccessful, so the program could continue.

CMS is expected to soon announce the 15 drugs that will be eligible for negotiation starting next year. These prices would take effect in 2027.

The announcement comes after CMS proposed a plan to mitigate potential Part D premium increases next year. The premium increases are a result of the $2,000 cap on out-of-pocket costs imposed by the Drug Pricing Act and other changes that require insurers to take greater responsibility for covering drug costs.

Senate Finance Committee Ranking Member Michael D. Crapo (R-Idaho), Energy and Commerce Committee Chairwoman Cathy McMorris Rodgers (R-Wash.), and Budget Committee Chairwoman Jason Smith (R-Mo.) have asked the Government Accountability Office to review the CMS proposal.

“The measures advanced by the recently announced demonstration would simply shift costs from plan sponsors and insureds to taxpayers and obscure the law's impact without addressing its underlying causes,” the lawmakers wrote in a letter to Comptroller General Gene Dodaro.