The Biden administration has taken a significant step towards lowering drug costs for older adults in the U.S. by unveiling a list of 10 drugs that will be subject to price negotiations between manufacturers and Medicare. This announcement marks an effort to address the increasingly burdening costs of prescription medications for Medicare Part D beneficiaries. The list comprises drugs with the highest spending for the period of June 2022 to May 2023.
Out of the 10 drugs on the list, three medications emerged as the most widely used among Medicare beneficiaries. Leading the way is Eliquis, a blood thinner developed by Bristol-Myers Squibb and co-developed by Pfizer. This drug, utilized to prevent blood clotting and decrease the risk of stroke, had a staggering 3.7 million Medicare enrollees during the specified time period. Following closely is Jardiance, a diabetes medication manufactured by Boehringer Ingelheim, which was used by nearly 1.6 million Medicare beneficiaries with Type 2 diabetes. Johnson & Johnson’s Xarelto, another blood thinner, came in third, with approximately 1.3 million beneficiaries relying on it during the specified time.
Not only were Eliquis, Jardiance, and Xarelto the most widely used drugs, but they also accounted for the majority of spending by Medicare Part D for the identified period. CMS reported that Eliquis alone incurred a cost of $16.5 billion, Jardiance cost approximately $7 billion, and Xarelto amounted to $6 billion. The total expenditure on the 10 medications amounted to $50.5 billion, implying that they constituted about 20% of the overall Part D prescription drug costs.
With around 50.5 million patients currently enrolled in Part D plans, according to the Kaiser Family Foundation, it is evident that a substantial number of individuals rely on these medications for their well-being. Of these enrollees, more than 8.2 million individuals depend on the 10 drugs listed. These statistics underscore the significance of negotiating prices for these medications to alleviate the financial burden on older adults and improve access to essential treatments.
Manufacturers of the identified drugs must commit to the negotiation process through signing agreements by October 1. CMS will proceed by presenting an initial price offer to the manufacturers in February 2024, after which the companies have one month to accept or propose a counteroffer. The negotiation phase will conclude in August 2024, with the agreed-upon prices published on September 1, 2024. However, the reduced prices will not come into effect until January 2026, allowing for an extended transition period.
The unveiling of the list of drugs for price negotiations between manufacturers and Medicare is a significant development in the ongoing efforts to tackle the soaring drug costs faced by older adults. With Eliquis, Jardiance, and Xarelto emerging as the most widely used and cost-intensive medications, the impact of these negotiations on the financial well-being and the accessibility of treatments for Medicare beneficiaries cannot be understated. While the negotiation process is yet to unfold, this step marks a vital milestone towards creating a more affordable and sustainable healthcare system for older adults in the United States.