Reaction Mixed After CMS Unveils Negotiated Medicare Drug Prices

CMS recently announced the agreed-upon lower Medicare prices for the 10 drugs selected for negotiations under the Inflation Reduction Act (IRA), resulting in mixed reactions among advocacy groups and other organizations.¹

President Joe Biden signed the IRA into law in August 2022, aiming to expand Medicare benefits, lower drug costs, and improve the program's sustainability for future generations.² A year later, CMS announced the first 10 drugs for Medicare price negotiations under the IRA.³

CMS initiated negotiations in early 2024 by proposing original prices to the respective drug companies, which then responded with counteroffers.⁴ Agreements for some drugs were reached after negotiation meetings this past spring. For the remaining drugs, CMS issued final offers to the respective companies in July, with a response deadline of August 1; this resulted in agreed prices for all 10 drugs.

Some groups praised CMS after it announced the 10 negotiated Medicare drug prices while others criticized its potential impacts on competition and drug development. | Image Credit: Stillfx - stock.adobe.com

The following are the 10 drugs and their negotiated prices¹:

1. Apixaban (Eliquis; Bristol Myers Squibb/Pfizer): $231 (56% discount from list price)
2. Empagliflozin (Jardiance; Boehringer Ingelheim/Lilly): $197 (66%)
3. Rivaroxaban (Xarelto; Janssen): $197 (62%)
4. Sitagliptin (Januvia; Merck): $113 (79%)
5. Dapagliflozin (Farxiga; AstraZeneca): $178.50 (68%)
6. Sacubitril/valsartan (Entresto; Novartis): $295 (53%)
7. Etanercept (Enbrel; Amgen): $2335 (67%)
8. Ibrutinib (Imbruvica; Pharmacyclics/Johnson & Johnson): $9319 (38%)
9. Ustekinumab (Stelara; Janssen Biotech): $4695 (66%)
10. Insulin aspart (Fiasp, Fiasp FlexTouch, FiaspPenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill; Novo Nordisk): $119 (76%)

These prices will go into effect by 2026 for patients enrolled in Medicare prescription drug coverage, with an estimated $1.5 billion in overall savings expected under the standard benefit design.⁴ These savings are in addition to other IRA cost savings, like the first cap on out-of-pocket drug costs for Medicare beneficiaries.

Some groups applauded the negotiated prices, like the Senate Finance Committee.⁵ Committee Chair Ron Wyden (D, Oregon) said that these new, lower prescription drug prices for Medicare beneficiaries mean older patients save money at the pharmacy. He noted that it also marks a shift in the relationship between taxpayers and older patients who need affordable prescription drugs, and pharmaceutical companies.

"While Trump and his Republican allies in Congress want to leave Big Pharma in charge so seniors pay higher prices, Democrats have delivered lower costs, more consumer protections, and accountability of drug companies that raise prices with impunity," Wyden said.

Similarly, the American College of Rheumatology (ACR) praised CMS for the negotiated prices, especially for etanercept and ustekinumab, drugs frequently used to treat patients with rheumatic diseases.⁶ Deborah Dyett Desir, MD, ACR president, said that CMS's efforts to lower out-of-pocket medication expenses for Medicare beneficiaries will help prevent them from skipping or forgoing treatments, which often lead to disease progression and permanent harm.

"While there is still more to be done to reduce prescription drug costs, we are greatly encouraged by the important step this initiative takes in helping seniors afford the medications they need to manage their rheumatic conditions," Desir said.

Conversely, other groups responded more negatively, including the Biosimilars Forum.⁷ Juliana M. Reed, executive director, said the Biosimilars Forum is "greatly concerned" that CMS is misinterpreting the Biosimilar Special Rule of the IRA. This rule intended to omit products with imminent biosimilar competition from negotiation since biosimilars ultimately provide patients with more choices and lower prescription drug prices.

However, CMS chose ustekinumab as 1 of the 10 drugs for negotiation despite several Stelara biosimilars set to launch in 2025. Consequently, Reed asked CMS to follow the intent of the IRA and remove Stelara from the list to allow patients access to lower-cost biosimilars.

"The Forum supports lower drug prices for patients, and we believe free market competition is the best way to achieve this," Reed said. "CMS has the opportunity to promote competition that lowers prices and increases access for patients through lower-cost drugs, like biosimilars. Biosimilars can save the US health care system up to $133 billion by next year if they are accessible."

The National Pharmaceutical Council (NPC) also reacted more negatively.⁸ Despite CMS claims regarding savings, John M. O'Brien, PharmD, MPH, NPC president and CEO, said the impact of negotiated prices on patients at the pharmacy counter is currently unknown.

Additionally, he noted that CMS did not disclose what evidence it used when negotiating prices, whether it listened to clinicians or patients, or its plan to protect patient access and out-of-pocket spending. O'Brien explained that this information is important since CMS's actions affect the entire market. Therefore, it could potentially impact investment decisions in new medicines and prices charged by private insurers.

"Our research suggests the IRA will reduce the number of conditions new medicines are approved to treat and limit postapproval research used to establish treatment guidelines, while encouraging plans to limit access," O'Brien said. "We'll be watching what happens over the coming months and conducting new research about the impact of this law."

Similarly, the Pharmaceutical Research and Manufacturers of America (PhRMA) said that patients will be "disappointed" despite CMS claiming the negotiated drug prices will save billions of dollars.⁹ PhRMA President and CEO Steve Ubl noted that there are no guarantees patients will see lower out-of-pocket costs since the IRA does nothing to control pharmacy benefit managers (PBMs) or insurance companies, who ultimately decide drug coverage and price.

Also, Ubl explained that there are fewer Medicare Part D plan options with increasing premiums due to the IRA. Meanwhile, PBMs and insurers are covering fewer medicines and intend to impose further coverage restrictions once the negotiated prices go into effect. Therefore, more than 3 million beneficiaries who take drugs with government-set prices will pay more in 2026.

Lastly, he said pharmaceutical companies began changing their research programs due to the IRA. Experts predict this will result in fewer treatments, including those for mental health, cancer, and rare diseases.

"The ironically named Inflation Reduction Act is a bad deal being forced on American patients: higher costs, more frustrating insurance denials, and fewer treatments and cures for our loved ones," Ubl said.

References

1. Santoro C. Lower drug prices announced under Medicare negotiation program. The American Journal of Managed Care^®. August 15, 2024. Accessed August 16, 2024. https://www.ajmc.com/view/lower-drug-prices-announced-under-medicare-negotiation-program

2. Negotiating for lower drug prices works, saves billions. CMS. August 15, 2024. Accessed August 16, 2024. https://www.cms.gov/newsroom/press-releases/negotiating-lower-drug-prices-works-saves-billions

3. Mattina C. CMS releases list of 10 drugs subject to price negotiation under IRA. AJMC®. August 29, 2023. Accessed August 15, 2024. https://www.ajmc.com/view/cms-releases-list-of-10-drugs-subject-to-price-negotiation-under-ira

4. Medicare drug price negotiation program: negotiated prices for initial price applicability year 2026. CMS. August 15, 2024. Accessed August 16, 2024. https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026

5. Wyden cheers lower drug prices for seniors through Medicare negotiation. US Senate Committee on Finance. August 15, 2024. Accessed August 16, 2024. https://www.finance.senate.gov/chairmans-news/wyden-cheers-lower-drug-prices-for-seniors-through-medicare-negotiation

6. ACR applauds lower negotiated prices for arthritis drugs. American College of Rheumatology. August 15, 2024. Accessed August 16, 2024. https://rheumatology.org/press-releases/american-college-of-rheumatology-applauds-lower-negotiated-prices-for-common-arthritis-drugs

7. Quinn K. Biosimilars Forum calls on CMS to support lower-cost biosimilars and increase access for patients. Biosimilars Forum. August 15, 2024. Accessed August 16, 2024. https://biosimilarsforum.org/2024/08/15/biosimilars-forum-calls-on-cms-to-support-lower-cost-biosimilars-and-increase-access-for-patients/

8. IRA & the Medicare Drug Price Negotiation Program. National Pharmaceutical Council. August 15, 2024. Accessed August 16, 2024. https://www.npcnow.org/topics/health-spending/ira-medicare-drug-price-negotiation-program

9. PhRMA statement on government price setting in Medicare Part D. Pharmaceutical Research and Manufacturers of America. August 14, 2024. Accessed August 16, 2024. https://phrma.org/resource-center/Topics/Medicare/PhRMA-Statement-on-Government-Price-Setting-in-Medicare-Part-D