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Specialty Pharmacy ContinuumHHS Selects First 10 Drugs for Medicare Drug Price Negotiation; Policy Faces Multiple Legal Challenges From Pharma

Historic Move by HHS Enables Medicare to Negotiate Drug Prices Under the New Inflation Reduction Act

The Department of Health and Human Services (HHS) has taken a groundbreaking step by announcing the first set of 10 prescription drugs that will be subject to price negotiations under Medicare Part D, as part of the Inflation Reduction Act (IRA). Despite legal challenges from pharmaceutical companies and their allies, the negotiations are slated to have a lasting impact on drug affordability for common conditions ranging from diabetes to heart failure.

Key Points:
  • This is the first time Medicare has the authority to negotiate prescription drug prices, marking a historic policy shift.
  • Drugs for diabetes, heart failure, kidney disease, and blood clot prevention are among those on the list for negotiation.
  • The law has already faced eight legal challenges from pharmaceutical firms such as AstraZeneca, Merck, and Johnson & Johnson.
  • Negotiations will take place in 2023 and 2024, with the new prices taking effect in 2026.
  • Medicare enrollees paid $3.4 billion in out-of-pocket costs in 2022 for the 10 drugs selected.
Additional Points:
  • Bonnie Kirschenbaum, an expert on reimbursement, questioned the inclusion of insulins on the list since their prices have already come down.
  • The selected drugs accounted for $50.5 billion or about 20% of total Part D gross covered prescription drug costs between June 2022 and May 2023.
  • If manufacturers refuse to negotiate, they face penalties such as withdrawing from the Medicare and Medicaid market or paying an excise tax.

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