US expects to save billions in Medicare drug price cuts
But Bristol Myers Squibb says it will not solve the problem of out-of-pocket costs for patients
15 August 2024 - 16:04
byPatrick Wingrove and Trevor Hunnicutt
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Washington — The US government will save $6bn in the first year from new prices the Biden administration has negotiated on 10 top-selling prescription drugs for the Medicare health programme for older Americans, officials said on Thursday.
President Joe Biden’s Inflation Reduction Act, signed into law in 2022, allows Medicare to negotiate prices for some of the most costly drugs that the programme covers for 66-million people.
The new prices will go into effect in 2026. They represent cuts to individual list prices that do not reflect any rebates and discounts the government may already have been getting for the drugs, though the government’s estimated savings from the negotiations do take those discounts into account.
Merck’s diabetes drug Januvia faces the steepest percentage price cut of the drugs on the list, decreasing 79%, and the prices of Novo Nordisk’s insulin aspart products will be slashed by 76%, according to the government. The prices of the other eight drugs on the list will be cut by between 68% and 38%.
The administration said people covered by Medicare, which mostly serves Americans aged 65 and over, would also save $1.5bn in out-of-pocket costs for the prescription medicines in 2026. They include widely used diabetes treatments Januvia and Jardiance, blood thinners Eliquis and Xarelto and leukaemia drug Imbruvica.
The officials did not provide further details on the new prices or say why the full $6bn in savings would not be passed to patients.
Bristol Myers Squibb, which makes Eliquis, said the 56% price cut to its drug would not solve the “biggest problem in patient affordability” of out-of-pocket costs, which are determined by health insurers and pharmacy benefit managers.
Pharmacy benefit managers are companies that handle prescription drug benefits for health insurance companies, large employers and Medicare prescription drug plans. They negotiate fees and volume-based discounts, known as rebates, on their behalf of payers with drugmakers and pharmacies.
Johnson & Johnson, whose Xarelto drug and Crohn’s disease medicine Stelara face list price cuts of 62% and 66%, respectively, also said patients would face higher costs as a result of the price cuts.
The Democratic-run administration hopes the cost savings will ease Americans’ anger about high prices, an issue they frequently say is their top concern as they head into the closely contested November 5 presidential election between Democratic vice-president Kamala Harris and Republican former president Donald Trump.
“Every American should be able to access the healthcare they need no matter their income or wealth,” said Harris, who is holding events this week on her plans to cut costs.
Harris’ tiebreaking Senate vote passed the law that allows for the drug price negotiations, which no Republicans supported. In a statement, she also pointed to her work as California attorney-general holding “big pharma accountable for their deceptive and illegal practices”.
More than half of voters in 2020 were over the age of 50, and healthcare consumes about 8% of Americans’ spending, according to Pew Research Center and labour department data. Inflation has ebbed, but higher prices since the Covid pandemic have left consumers smarting. Consumer prices rose 2.9% over the 12 months through July, and the category including prescription drugs gained roughly the same percentage.
US health secretary Xavier Becerra characterised the negotiations with drugmakers as comprehensive and intense. “After substantial back and forth, either we accepted an offer or a company accepted our offer,” he said.
The pharmaceuticals industry has fought hard to block the Medicare negotiations, with several companies suing the administration and warning that they may have to curtail some drug development programs as a result.
Several of these drugmakers last month said they did not expect a significant effect on their businesses after seeing confidential drug prices from the government.
New Medicare drug price talks are expected to include 15 further drugs and begin in February.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
US expects to save billions in Medicare drug price cuts
But Bristol Myers Squibb says it will not solve the problem of out-of-pocket costs for patients
Washington — The US government will save $6bn in the first year from new prices the Biden administration has negotiated on 10 top-selling prescription drugs for the Medicare health programme for older Americans, officials said on Thursday.
President Joe Biden’s Inflation Reduction Act, signed into law in 2022, allows Medicare to negotiate prices for some of the most costly drugs that the programme covers for 66-million people.
The new prices will go into effect in 2026. They represent cuts to individual list prices that do not reflect any rebates and discounts the government may already have been getting for the drugs, though the government’s estimated savings from the negotiations do take those discounts into account.
Merck’s diabetes drug Januvia faces the steepest percentage price cut of the drugs on the list, decreasing 79%, and the prices of Novo Nordisk’s insulin aspart products will be slashed by 76%, according to the government. The prices of the other eight drugs on the list will be cut by between 68% and 38%.
The administration said people covered by Medicare, which mostly serves Americans aged 65 and over, would also save $1.5bn in out-of-pocket costs for the prescription medicines in 2026. They include widely used diabetes treatments Januvia and Jardiance, blood thinners Eliquis and Xarelto and leukaemia drug Imbruvica.
The officials did not provide further details on the new prices or say why the full $6bn in savings would not be passed to patients.
Bristol Myers Squibb, which makes Eliquis, said the 56% price cut to its drug would not solve the “biggest problem in patient affordability” of out-of-pocket costs, which are determined by health insurers and pharmacy benefit managers.
Pharmacy benefit managers are companies that handle prescription drug benefits for health insurance companies, large employers and Medicare prescription drug plans. They negotiate fees and volume-based discounts, known as rebates, on their behalf of payers with drugmakers and pharmacies.
Johnson & Johnson, whose Xarelto drug and Crohn’s disease medicine Stelara face list price cuts of 62% and 66%, respectively, also said patients would face higher costs as a result of the price cuts.
The Democratic-run administration hopes the cost savings will ease Americans’ anger about high prices, an issue they frequently say is their top concern as they head into the closely contested November 5 presidential election between Democratic vice-president Kamala Harris and Republican former president Donald Trump.
“Every American should be able to access the healthcare they need no matter their income or wealth,” said Harris, who is holding events this week on her plans to cut costs.
Harris’ tiebreaking Senate vote passed the law that allows for the drug price negotiations, which no Republicans supported. In a statement, she also pointed to her work as California attorney-general holding “big pharma accountable for their deceptive and illegal practices”.
More than half of voters in 2020 were over the age of 50, and healthcare consumes about 8% of Americans’ spending, according to Pew Research Center and labour department data. Inflation has ebbed, but higher prices since the Covid pandemic have left consumers smarting. Consumer prices rose 2.9% over the 12 months through July, and the category including prescription drugs gained roughly the same percentage.
US health secretary Xavier Becerra characterised the negotiations with drugmakers as comprehensive and intense. “After substantial back and forth, either we accepted an offer or a company accepted our offer,” he said.
The pharmaceuticals industry has fought hard to block the Medicare negotiations, with several companies suing the administration and warning that they may have to curtail some drug development programs as a result.
Several of these drugmakers last month said they did not expect a significant effect on their businesses after seeing confidential drug prices from the government.
New Medicare drug price talks are expected to include 15 further drugs and begin in February.
Reuters
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