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What You Need to Know About Medicare Price Negotiations

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Analysts Notebook joined discussion · Aug 30, 2023 16:27
The Biden administration has announced the first ten prescription drugs that will be negotiated for lower prices between manufacturers and Medicare, in an effort to make expensive medications more affordable for older Americans. Medicare has been given the power to negotiate drug prices directly with manufacturers, the first time this has occurred in the nearly 60-year history of the federal program, through President Joe Biden's Inflation Reduction Act which passed last year. The initial round of agreed-upon prices is set to go into effect in 2026.
Here are the 10 drugs subject to the initial talks this year:
Eliquis, made by $Bristol-Myers Squibb (BMY.US)$, is used to prevent blood clotting, to reduce the risk of stroke.
Jardiance, made by Boehringer Ingelheim, is used to lower blood sugar for people with Type 2 diabetes.
Xarelto, made by  $Johnson & Johnson (JNJ.US)$, is used to prevent blood clotting, to reduce the risk of stroke.
Januvia, made by  $Merck & Co (MRK.US)$, is used to lower blood sugar for people with Type 2 diabetes.
Farxiga, made by  $AstraZeneca (AZN.US)$, is used to treat Type 2 diabetes.
Entresto, made by  $Novartis AG (NVS.US)$, is used to treat certain types of heart failure.
Enbrel, made by  $Amgen (AMGN.US)$, is used to treat rheumatoid arthritis. 
Imbruvica, made by $AbbVie (ABBV.US)$, is used to treat different types of blood cancers. 
Stelara, made by Janssen, is used to treat Crohn's disease.
Fiasp and NovoLog, insulins made by  $NOVO NORDISK A/S (NONOF.US)$.
The initial list of ten prescription drugs that will be subject to these negotiations account for $50.5 billion or about 20% of total Part D prescription drug costs. The pharmaceutical industry views the new process as a threat to profits and drug innovation, and several pharmaceutical companies, including Merck, Johnson & Johnson, Bristol-Myers Squibb, and Astellas Pharma, along with lobbying organizations like PhRMA and the U.S. Chamber of Commerce, have filed lawsuits against the Medicare negotiation process, alleging the talks are unconstitutional. However, the new initiative is viewed positively by Democrats in Congress and consumer advocates who have long pushed for lower drug prices.
Drugmakers must sign agreements to participate in the Biden administration's Medicare negotiations by Oct. 1, with initial price offers made in February 2024 and negotiations ending in August 2024. If a manufacturer declines to negotiate, it will face an excise tax of up to 95% of its medication's U.S. sales or risk having all products removed from Medicare and Medicaid markets. The talks are expected to save Medicare approximately $98.5 billion over a decade and reduce out-of-pocket costs for enrollees who take an average of four to five prescription drugs per month. Negotiations will expand each year, with up to 60 drugs potentially negotiated by 2029.
This is just going to put more money back in the pockets of millions of Americans," Biden said.
Source: CNBC
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