Major drugmakers including Eli Lilly and Co (NYSE:LLY), Johnson & Johnson (NYSE:JNJ) and Merck & Co Inc (NYSE:MRK) have agreed to participate in the Inflation Reduction Act’s (IRA's) Medicare Drug Price Negotiation Program, the Biden administration said on Tuesday.
The Inflation Reduction Act of 2022 granted the ability for Medicare to negotiate drug prices directly with manufacturers with the aim of reducing the costs of medications for seniors and other Medicare beneficiaries.
It aims to reduce costs for drugs used to treat conditions such as heart failure diabetes, arthritis, cancers, and blood clots, among other ailments.
The Biden administration in late August named the first 10 drugs that would be subject to price negotiations which accounted for $3.4 billion in out-of-pocket costs for an estimated nine million Medicare enrollees in 2022.
They are:
- Bristol-Myers Squibb Co (NYSE:BMY)'s Eliquis for the prevention and treatment of blood clots
- Boehringer Ingelheim and Eli Lilly's Jardiance for diabetes and heart failure
- J&J's Xarelto for the prevention and treatment of blood clots
- Merck's Januvia for diabetes
- AstraZeneca PLC (LSE:AZN)'s Farxiga for diabetes, heart failure, and chronic kidney disease
- Novartis AG (ADR) (NYSE:NVS)'s Entresto for heart failure
- Amgen, Inc. (NASDAQ:AMGN)'s Enbrel for rheumatoid arthritis, psoriasis and psoriatic arthritis
- Abbvie (NYSE:ABBV)'s Imbruvica for blood cancers
- J&J-owned Janssen Pharmaceuticals' Stelara for psoriasis; psoriatic arthritis, Crohn’s disease, and ulcerative colitis
- Novo Nordisk (NYSE:NVO)'s Fiasp, Fiasp FlexTouch, Fiasp PenFill NovoLog, NovoLog FlexPen, NovoLog PenFill (insulins) for diabetes
Price negotiations for these 10 drugs will begin in 2024, with the reduced prices to go into effect in 2026.
Medicare will negotiate the prices for up to 60 drugs covered under Medicare Part D and Part B over the next four years, with an additional 20 drugs per year to be negotiated after that.
In August I announced Medicare had selected ten drugs for price negotiation.
Well, last Friday a court blocked Big Pharma and their allies when they tried to stop us.
Now, those manufacturers are coming to the table, where Medicare will work to lower prices for seniors. pic.twitter.com/PNuaBWtfPk
— President Biden (@POTUS) October 3, 2023
Despite all drugmakers tapped for the initial round of price negotiations agreeing to participate, numerous drugmakers and industry groups have filed legal challenges against the price negotiations.
“Novartis has signed the Medicare Drug Price Negotiation Program agreement for 2026 because this was our only viable option. If we had not signed the agreement, Novartis would face excessive and crippling fines,” Novartis told Bloomberg Law.
A J&J spokesperson also told the publication: “We continue to believe the IRA’s drug price setting provisions are damaging to the innovation ecosystem that delivers transformative therapies and cures to patients.”
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie