What to know about the 10 drugs now subject to Medicare price negotiation

The Biden administration released Tuesday a list of 10 drugs for which Medicare will negotiate prices for the first time in the history of the publicly funded health program for seniors and people with disabilities.

The list includes common — and often pricey — medications to treat diabetes, heart disease, and other chronic health conditions.

The initiative, introduced under the Inflation Reduction Act, is intended to stem rising prescription drug costs for seniors and people with disabilities covered by Medicare. People with Medicare Part D — add-on drug coverage used with traditional Medicare plans — spent $3.4 billion out of pocket on just those 10 medications in 2022, according to the U.S. Department of Health and Human Services.

» READ MORE: How Medicare drug costs could change under the Inflation Reduction Act

Critics say the proposal is the wrong approach to stemming Medicare costs. Lawmakers should instead look for ways to lower the total cost per person, said Kenneth Thorpe, chairman of the Partnership to Fight Chronic Disease, a nonprofit organization that advocates for lower health-care costs and campaigned against the drug price negotiation proposal in a series of television advertisements.

“The problem with this approach it’s so myopic, picking one sector — drugs,” he said.

Others argue that enabling Medicare to negotiate drug prices, which all private insurance plans already do, is “way overdue and absolutely necessary,” and could save taxpayers billions of dollars, said Stephen Crystal, the director of the Center for Health Services Research at Rutgers University.

Here’s what to know:

These 10 drugs accounted for about 20% of the federal government’s spending on Part D drugs — $50.5 billion — between the beginning of June 2022 and the end of May 2023, the time frame used to determine which drugs would be eligible for negotiation, HHS said in a statement Tuesday.

New prices are expected to take effect Jan. 1, 2026. Medicare will negotiate with drug companies in 2023 and 2024, and publish agreed-upon prices by September 2024.

Lawsuits by several drug makers could delay or derail negotiations. Pharmaceutical companies Bristol-Myers Squibb and Pfizer, which together sell the blood-thinner Eliquis, and Merck, which makes the diabetes drug Januvia, are among the companies that have already filed complaints, along with the lobbying group Pharmaceutical Research and Manufacturers of America, or PhRMA, the Associated Press reported.

Industry experts and legal scholars believe the issue could ultimately be decided by the U.S. Supreme Court.

While Medicare has been around since the 1960s, prescription drug coverage was only introduced in 2003.

To get Republican support for the Democrat-proposed idea, members of Congress compromised at the time: Medicare could cover prescription drugs, but could not negotiate prices, according to a history of Medicare drug pricing published by the journal Health Affairs.

In the private sector, however, pharmacy benefit managers negotiate with drug companies, often driving prices down by making them compete.

As part of the Inflation Reduction Act, Congress agreed last year to allow Medicare to begin doing the same — starting with 10 widely used medications. The legislation allows Medicare to select 15 more drugs for price negotiation in 2027 and 2028, and up to 20 additional medications each year after that.

People have two options to obtain prescription drug coverage under Medicare:

Part D prescription drug plans can be purchased by people with traditional Medicare.

Medicare Advantage plans, which are managed by private insurers, typically include prescription drug coverage and already negotiate prices with manufacturers.

» READ MORE: How much will people with diabetes in Pa. and N.J. save with the new Medicare insulin cap?

As of January, people with Medicare have a co-pay of no more than $35 a month for insulin used in the treatment of diabetes, a change that HHS estimated would save insulin users an average of $500 a year.

The price the government pays for insulin didn’t change, but it could now.

Medicare will be negotiating the price the government pays manufacturers for several drugs prescribed for people with diabetes. The program could pass on additional savings to patients in the future in the form of lower co-pays and greater cost-sharing, Crystal said.