Biden Administration Begins Medicare Drug Price Negotiations

Bottles of prescription drugs are filled at Intermountain Heathcare in Midvale, Utah, on Sept. 10, 2018. Photo by George Frey/Getty Images

The Biden administration on Feb. 1 sent out initial offers to the manufacturers of 10 of the most expensive and commonly used drugs as part of the first round of negotiations aimed at lowering medication prices for millions of Americans.

The U.S. Department of Health and Human Services (HHS) announced the launch of the first cycle of the “Medicare Drug Price Negotiation Program” in a press release. However, it did not specify the initial offers made to pharmaceutical companies in the government’s negotiations.

Officials noted that under the Inflation Reduction Act, signed into law by President Joe Biden in 2022, Medicare now has the authority to directly negotiate prescription drug prices with drug companies, a practice similar to that of the Department of Veterans Affairs and other federal agencies.

President Biden has made lowering the high cost of prescription medicines a key priority during his time in office, with the Democrat regularly taking aim at pharmaceutical companies and accusing them of making “record profits” while leaving American families saddled with sky-high prices and unable to afford life-saving prescription drugs.

The negotiation cycle will involve roughly six months of discussions between the manufacturers and the federal Centers for Medicare and Medicaid Services (CMS) with the final negotiated prices set to take effect in 2026.

The first 10 medications selected for price negotiations, already used by millions of Americans, treat a wide range of health conditions. These include heart disease, heart failure, blood clots, certain cancers, chronic kidney disease, diabetes, autoimmune diseases, and more.

‘Exorbitant Price Gouging’

According to the CMS, the medications include Eliquis, Jardiance, Xarelto, Januvia, Enbrel, Farxiga, Entresto, Imbruvica, and Stelara, as well as multiple types of Novo Nordisk’s Fiasp such as Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, and NovoLog PenFill.

The drugmakers are Bristol Myers Squibb, Merck, Johnson & Johnson’s Janssen division, Novo Nordisk, and AstraZeneca, among others.

“Today is another milestone on the march to ensure people with Medicare get fair prices for prescription drugs. I am confident that this process will lead to lower prices, putting an end to exorbitant price gouging by pharmaceutical companies,” said HHS Secretary Xavier Becerra in a statement.

“From day one, the Biden-Harris Administration has been committed to lowering the cost of prescription drugs for the American people,” he continued.

“Allowing Medicare to negotiate drug prices is just one tool we’re using to lower prices thanks to the president’s lower cost prescription drug law. From capping insulin at $35 per month to making drug companies pay a rebate for raising their prices faster than inflation, to capping out-of-pocket costs in Part D, we are delivering on that day-one promise,” the HHS Secretary concluded.

‘Exercise to Win Political Points’

The price negotiations are part of a push by President Biden to lower drug prices ahead of the November presidential election, where he looks set for a potential rematch with his predecessor, former President Donald Trump.

“For the first time in history, Medicare is making offers on the fair price for 10 of the most widely used and expensive drugs,” President Biden said in a statement. “Medicare is no longer taking whatever prices for these drugs that the pharmaceutical companies demand. The days when Americans pay two to three times what they pay for prescription drugs in other countries are ending. ”

The Congressional Budget Office (pdf) anticipates the drug negotiations will not only lower average drug prices paid by Medicare but will reduce the budget deficit by $25 billion in 2031.

However, pharmaceutical companies have pushed back on the negotiations, branding them unconstitutional, and said they were essentially forced to take part in the negotiating process or risk paying steep penalties.

Lobbying groups including the Pharmaceutical Research and Manufacturers of America (PhRMA) are challenging the process in court.

In a statement Thursday, PhRMA’s senior vice president of public affairs Alex Schriver said the negotiations process “continues to be an exercise to win political points on the campaign trail rather than do what’s in the best interest of patients.”

“Government bureaucrats are operating behind closed doors to set medicine prices without disclosing for months how they arrived at the price or how much patient and provider input was used. This lack of transparency and unchecked authority will have lasting consequences for patients long after this administration is gone,” Mr. Schriver concluded.