The Biden administration on Tuesday selected 10 drugs that will be part of a historic first round of price negotiation through Medicare, including the blood thinner Xarelto and Type-2 diabetes drugs Jardiance and Januvia.
Other drugs on the list treat conditions ranging from arthritis to autoimmune diseases.
The announcement from the Department of Health and Human Services was a watershed moment in Democrats’ long-running push to flex government purchasing power and force down what companies charge the federal insurance program for more than 65 million seniors.
Democrats in Congress authorized the drug-negotiation program in Mr. Biden’s signature tax and climate legislation, the Inflation Reduction Act. The complete list of drugs selected were Eliquis; Jardiance; Xarelto; Januvia; Farxiga; Entresto; Enbrel; Imbruvica; Stelara; and Fiasp.
Under the program, the first round of negotiated prices will take effect in 2026. Negotiation will occur this year and deep into 2024, with the final prices published in the fall — right before the presidential election.
Additional drugs from Medicare Part D and the doctor-administered Part B program will be selected in subsequent years.
“For far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs,” HHS Secretary Xavier Becerra said. “Although drug companies are attempting to block Medicare from being able to negotiate for better drug prices, we will not be deterred.”
HHS said the selected drugs accounted for $50.5 billion in total prescription drug-benefit spending, or about 20% of total Part D costs between June 1, 2022, and May 31.
The administration is supposed to consider manufacturing costs, revenue and sales in the U.S. and other factors when determining a “maximum fair price” for a selected drug.
Drug companies that refuse to participate in the negotiation process face an excise tax that begins at 65% of U.S. sales of the product, or they can withdraw medicines from Medicaid and Medicare coverage.
The Centers for Medicare and Medicaid Services had until Sept. 1 to release the inaugural list of drugs subject to negotiations but released a few days early.
Mr. Biden will hold a White House event Tuesday to celebrate the moment. He frequently boasts he fought Big Pharma and won after longtime plans to require negotiation hit stumbling blocks in Congress.
“For years, Big Pharma won. Big Pharma blocked us. But not this time,” Mr. Biden said at an August event celebrating the one-year anniversary of his signature law.
The pharmaceutical industry and allies aren’t done fighting.
Drugmakers say the negotiation is more like extortion, and multiple drug companies and the U.S. Chamber of Commerce have filed lawsuits seeking to block the program.
Merck, for instance, says the program violates Fifth Amendment protections against the government seizure of property without just compensation. It also alleges First Amendment compelled-speech doctrines by forcing drug companies to smile and pretend they took part in a voluntary process.
More broadly, drugmakers say government price controls will undercut their ability to invest in research and development of new cures.
The Congressional Budget Office estimates the drug-negotiation program will save taxpayers $100 billion through 2031 while modestly curtailing the share of new drugs coming to market by around 1%.
“However, there is no way to know if it is likely to be fewer cancer drugs or Alzheimer’s treatments because the administration has not examined the issue. It is a well-known fact that in other countries with similar policies, patients have access to fewer treatments and longer wait times to get treatment,” U.S. Chamber Executive Vice President and Chief Policy Officer Neil Bradley said.
For now, the program is a central plank of Mr. Biden’s campaign push to promote “Bidenomics” as a way to lift up working Americans and reject “trickle-down” economics that favors tax breaks or other benefits for the wealthy and corporations.
After this initial round, the government will pick another 15 Part D drugs for price setting in 2025, an additional 15 Part B and Part D drugs in 2026 and 20 more Part B and Part D drugs in subsequent years.
Some categories of drugs are excluded from the negotiation process, including drugs that have a generic of biosimilar available, and small-molecule drugs that are less than nine years from the approval date and biological products that have been on the market for less than 13 years.
The Incubate Coalition, which informs policymakers about the role of venture capital in developing treatments, said the disparate treatment between categories is a flaw.
“Numerous biotech companies have already scaled back research into experimental small-molecule treatments due to the IRA’s arbitrary price-setting timelines,” coalition CEO John Stanford said. “Targeting small-molecule drugs for price controls earlier than biologics will force life sciences firms to reconsider a broad array of risky projects, including developing cutting-edge small-molecule therapies for a range of diseases from cancer to Alzheimer’s.”
Patient advocates took the opposite view. They say the exemption period for certain drugs will make them too costly.
“The list shows instead how important it is to expand those negotiation powers. Several monopolized drugs that are expensive for Medicare today are exempted from price negotiation, and will remain expensive,” said Peter Maybarduk, director of the Access to Medicines Program at Public Citizen. “One reason for this is a many-years-long grace period after a drug first comes to market. During those years, drugmakers will exploit patent monopolies with minimal checks on profiteering.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.