A Big-Deal Effort To Lower Prescription Drug Prices Is Set To Launch This Week

Joe Biden is preparing to launch one of his presidency’s most far-reaching reforms ― an initiative that could make a significant difference in the lives of everyday Americans and that consistently polls well, although at this point relatively few people seem to realize it’s happening.

The initiative seeks to make prescription drugs cheaper for Medicare and its beneficiaries by instructing the Department of Health and Human Services, or HHS, to negotiate the prices of certain medications directly with their manufacturers.

The process formally starts with the naming of the 10 drugs that will be subject to negotiation in the initiative’s first year. Administration officials intend to make that announcement early this week, probably on Tuesday morning in advance of a White House event, according to sources privy to plans. Politico first reported those plans last week.

Governments of other economically advanced countries have long set all drug prices through some sort of negotiation or direct regulation. Now the U.S. government has a chance to do this too, although it will only be for drugs in Medicare. And the first set of newly discounted drugs won’t actually be available in the program until 2026. 

Still, it’s a big change that comes after decades of activism, advocacy and agitation ― and it’s happening, finally, due to the enactment of the Inflation Reduction Act, which Democrats in Congress passed and Biden signed one year ago.

Supporters say the new price negotiation process could provide critical, even lifesaving financial relief to people with big medical expenses, while reducing the overall financial burden that Medicare places on taxpayers and premium-paying beneficiaries. 

“The drug provisions in the Inflation Reduction Act really are historic over time,” David Mitchell, president and founder of the Patients for Affordable Drugs Now advocacy group, said last week on a conference call for reporters.

But critics say that negotiation could mean smaller financial rewards for innovation, making it more difficult for drug companies to attract the investment they use to underwrite research and development of newer, better treatments.

President Joe Biden holds up a pamphlet as he delivers remarks on Medicare and lowering prescription drug costs in Hallandale Beach, Florida, on Nov. 1, 2022.
President Joe Biden holds up a pamphlet as he delivers remarks on Medicare and lowering prescription drug costs in Hallandale Beach, Florida, on Nov. 1, 2022.

President Joe Biden holds up a pamphlet as he delivers remarks on Medicare and lowering prescription drug costs in Hallandale Beach, Florida, on Nov. 1, 2022.

Those critics include Republicans who never supported the Inflation Reduction Act and have talked about repealing its provisions if they get enough power in Washington. Also among the detractors is the pharmaceutical industry, which has launched lawsuits challenging the constitutionality of the negotiation process. Those cases are still in front of the courts.

“The government’s arbitrary process for deciding the price of medicines will drive research and investment away from potentially lifesaving treatment options for Medicare patients,” Nicole Longo, senior director for public affairs at the Pharmaceutical Research and Manufacturers of America trade group, wrote in a blog item Monday.

However valid the competing claims about price negotiation, and whatever its trade-offs, the first step is the naming of those first 10 drugs ― which, according to the Inflation Reduction Act, must happen by this coming Friday, Sept. 1.

An Announcement And Then A Year Of Negotiations

It’s nearly certain that HHS has known for some time what those 10 drugs will be.

The Inflation Reduction Act phases in negotiation, adding more drugs over successive years, with instructions to focus on the drugs that are costing Medicare and its beneficiaries the most money. At the same time, the IRA excludes from negotiation some large classes of drugs, including those that already have competition as well as those that haven’t been on the market for very long.

And for this initial set of negotiations, the drugs can only come from Medicare Part D, which is the privately managed part of the program that covers most of the drugs people buy at pharmacies and administer themselves. Negotiation over drugs through Part B, which are typically administered in clinics and doctor’s offices, will take place in later years.

Based on that information, analysts at Moody’s and at the Center for American Progress ― along with researchers who published in the Journal of Managed Care & Specialty Pharmacy ― earlier this year identified drugs that they expected to see on the first list of 10. 

Their predictions don’t line up perfectly with one another, in part because they were making projections based on dated information. But Leigh Purvis, director of health care cost and access at AARP, said this week that likely candidates for negotiations include Eliquis, which prevents blood clots; Januvia, which raises insulin levels for people with Type 2 diabetes; and Imbruvica, which treats certain kinds of cancer.

Eliquis, the Moody’s analysis noted, “had more than twice the gross spending of the next highest Medicare Part D drug. That makes it the most likely candidate for price negotiations.” 

Following this week’s announcement, the negotiation process for those first 10 drugs will play out over the course of the following year, with the federal government collecting more data and soliciting public input ― and, eventually, exchanging price offers with manufacturers.

If those talks don’t lead to agreements with drugmakers along the way, then the government will make a final offer for what it considers a drug’s “maximum fair price” ― at which point the manufacturers can either accept the price, refuse it and pay financial penalties, or withdraw from selling drugs to Medicare and other public programs altogether.

But the negotiated prices won’t take effect until January 2026. And while the initiative will expand its reach with time, as a practical matter it’s going to be quite a while before Medicare beneficiaries see any savings from negotiations.

That may help explain why only 25% of Americans said they know that federal law now authorizes some price negotiation, according to a poll published in early August by the research organization KFF. Meanwhile, 12% said there was no such law and the rest ― 63% ― said they weren’t sure.

Some of the Inflation Reduction Act’s other drug-pricing provisions are kicking in sooner. Among them is a new, hard limit on out-of-pocket drug expenses in Medicare that will start to phase in next year. The effects of that will be especially visible to people with multiple high-cost medications ― although, as with price negotiations, most of the public doesn’t seem to know the change is coming.

A Chance To Raise Awareness ― And Public Support

This week’s announcement represents one attempt by Biden and his allies to raise awareness of these reforms. That could help protect them from future repeal efforts and, more immediately, could help Democrats in the 2024 elections.

Not only does drug price negotiation have consistently high poll numbers, even with self-identified Republican voters, but it is among those rare causes that has strong support from relatively conservative Democrats as well as their more liberal counterparts.

“Democrats are incredibly united on Medicare negotiation. It’s in all the messaging and all the polling,” Alex Lawson, the executive director at Social Security Works and a high-profile advocate for the reforms that became law last year, told HuffPost. “Call up any pollster, their main things will be, run on lowering drug prices ― that’s the issue, the issue everybody loves, no matter where you are.”

Of course, the Democrat who stands to benefit the most might be Biden, whose job approval ratings have been negative since early 2022. Letting voters know that he is responsible for enacting ― and then implementing ― a reform they like could help turn those numbers around.

The first step in that process is making sure voters realize the reforms are actually taking place.