Health Care Program Announces Prices of First 10 Drugs Under Negotiation

The Biden administration on Thursday released prices for the first 10 prescription drugs that were the subject of historic negotiations between drugmakers and Medicare, a milestone in a contentious process aimed at making expensive medications more affordable for America’s seniors.

The administration estimates that the new negotiated drug prices will result in about $6 billion in net savings for Medicare in 2026 alone when they officially go into effect, or 22% of the net savings overall. That’s based on the estimated savings the prices would have generated if they were implemented in 2023, senior administration officials told reporters Wednesday.

The Biden administration also expects the new rates to save Medicare enrollees $1.5 billion in 2026 alone.

“For many people, affording these drugs means the difference between having a chronic illness and living a full life,” Chiquita Brooks LaSure, administrator of the Centers for Medicare and Medicaid Services, told reporters. “These negotiated prices are not just about costs. They are about helping ensure that your parent, your grandparent or you can live longer and healthier.”

This comes one day before the second anniversary of the Inflation Reduction Act signed by President Joe Biden, which gave Medicare the authority to negotiate drug prices directly with manufacturers for the first time in the federal program's nearly 60-year history.

Below are the negotiated prices for a 30-day supply of the 10 drugs, along with their listed prices based on 2023 prescriptions, according to a Biden administration fact sheet released Thursday.

What Medicare and its beneficiaries pay for the drug is often much less than the list price, which is what the wholesaler, distributor, or other direct purchaser pays the manufacturer for the drug before any discounts.

It is worth noting that it is difficult to compare the new negotiated price of a drug to its current price, because most of the 10 drugs are already subject to significant discounts after special negotiations with Medicare Part D plans.

But the net price that Part D plans pay for a particular drug is unknown because those talks are confidential, according to Lee Purvis, director of prescription drug policy at the AARP Public Policy Institute. AARP, the influential lobbying group representing people over age 50, has defended Medicare’s new negotiating powers.

“So I think people are going to try to get to that question — are these negotiated prices lower than the net prices that Medicare Part D was already paying?” Purvis told CNBC. “So that’s the comparison that people are looking for. Now, with the understanding that the discounts are confidential, it’s going to be difficult.”

A senior administration official stressed that direct comparisons of negotiated prices with net prices paid by Medicare are “commercially confidential information.”

The administration unveiled the first group of drugs selected for pricing talks in August 2023, kicking off a nearly year-long negotiation period that ended earlier this month.

The final prices give drug companies, which have been vocal in their opposition to the policy, a glimpse into how much revenue they could expect to lose over the next few years. They also set a precedent for additional rounds of health care drug price negotiations that will begin in 2025 and beyond.

In a statement released Thursday, Biden called the newly negotiated rates a “historic achievement” made possible by the Inflation Reduction Act. He also specifically praised Vice President Kamala Harris for voting in favor of the law in the Senate in 2022.

Harris, the Democratic presidential candidate, said in a statement that she was proud to cast this decisive vote, adding that there is more work to be done to lower health care costs for Americans.

“Today’s announcement will be life-changing for so many of our loved ones across the country, and we won’t stop here,” Harris said in a statement Thursday, noting that additional prescription drugs will be selected for future rounds of negotiations.

But Steve Opel, CEO of the pharmaceutical industry's largest lobbying group, PhRMA, said in a statement Thursday that “there are no guarantees that patients will see lower out-of-pocket costs because the law does nothing to curb abuses by insurers and (pharmaceutical supply chain intermediaries) who ultimately decide which drugs are covered and what patients pay at the pharmacy.”

He added that the pricing talks could result in fewer treatments for cancer, mental health, rare diseases and other conditions because they “fundamentally change” the incentives for drug development.

The Biden administration has issued what’s called a maximum fair price for each drug, the highest price a Medicare Part D plan sponsor or beneficiary can pay for a treatment. Medicare Part D plans, run by private insurers, cover prescription drugs that older Americans get at pharmacies.

The lengthy negotiation process involved months of exchanging quotes between the companies and Medicare, which determined its initial offer for each drug using sales volume data, federal financial support for drug development, and data on pending or approved patent applications and exclusivity, among other information.

The negotiations are central to the Biden administration’s efforts to curb the rising cost of prescription drugs in the United States. Some congressional Democrats and consumer advocates have long pushed for change, as many seniors across the country struggle to afford care.

The price talks are expected to save money for Medicare enrollees, who on average take four to five prescription drugs a month. A senior administration official told reporters last year that nearly 10 percent of Medicare enrollees age 65 or older, and 20 percent of those younger than 65, face challenges affording their medications.

But the pharmaceutical industry sees the process as a threat to its revenue growth, profits and drug innovation, and last year several drug companies and trade groups filed lawsuits seeking to scuttle the negotiations and declare them unconstitutional.

The lawsuits by Merck and Novartis against the price talks are awaiting decisions in district courts. Each case overlaps with lawsuits by Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb and Johnson & Johnson that have been dismissed in recent months.

Drug companies said they remain strongly opposed to what many of them called “government price controls” through the Inflation Reduction Act.

“The price-fixing provision of the Inflation Reduction Act does nothing to benefit patients and will only harm the scientific innovation that makes life-changing treatments possible,” an AbbVie spokesperson said in a statement Thursday.

But a company spokesman said the price set for Imbruvica was within the range the company had expected.

Similarly, a Johnson & Johnson spokesperson claimed that patients in the United States would see higher costs, restricted access to medicines and fewer drugs as a result of the negotiations.

Bristol-Myers Squibb is the only company to date to have released specific information on the expected financial impact of the new negotiated prices.

In a statement on its website, the company said it expects Eliquis revenue in 2026 to be between $8.5 billion and $10.5 billion in the United States and between $10.5 billion and $12.5 billion globally. Bristol-Myers expects Eliquis sales in 2027 to be between $8 billion and $10 billion in the United States and between $8.5 billion and $11 billion globally.

In 2023, Elekis generated $8.59 billion in revenue in the United States and $12.21 billion in sales worldwide, according to a statement from the company.

The company noted that Eliquis is set to lose patent exclusivity and face competition from cheaper generics in the United States starting April 1, 2028. The blood thinner also faces patent expiration in some European Union markets in 2026.

A Novo Nordisk spokesperson said that while its lawsuit against the price talks progresses, the company will ensure that the new negotiated price is available to Medicare beneficiaries in 2026. The spokesperson also noted that rejecting the new prices would have resulted in severe penalties for the Danish drugmaker.

If a drug company refuses to negotiate with Medicare, it must either pay a consumer tax on up to 95% of its drug sales in the United States or withdraw all of its products from the Medicare and Medicaid markets.

Similarly, an AstraZeneca spokesperson said: “Withdrawal is not an option.” The company accepted the negotiated price because it believes “everyone who needs our medicines should have access to them.”

The 10 companies' drugs are among the top 50 drugs in terms of highest Medicare Part D spending.

According to the Centers for Medicare and Medicaid Services, the 10 drugs accounted for $50.5 billion, or about 20%, of total Part D prescription drug costs from June 1, 2022, to May 31, 2023. In 2022, 9 million seniors spent $3.4 billion out of pocket on the 10 drugs, with some paying more than $6,000 a year for just one of the drugs on the list, according to the Biden administration.

The drugs have been on the market for at least seven years without generic competitors, or 11 years in the case of biological products such as vaccines.

Medicare covers about 66 million people in the United States, and there are 50.5 million patients enrolled in Part D plans, according to 2023 data from health policy research organization KFF.

CMS has until March of next year to publish an explanation of the negotiated prices for each drug. These new prices will go into effect on January 1, 2026.

By February 2025, the Biden administration will also unveil up to 15 more drugs that will be subject to the next round of pricing talks, with agreed-upon prices set to take effect in 2027. Drug companies will have until the end of that month to decide whether to participate in the program.

After the second round, the Centers for Medicare and Medicaid Services can negotiate prices for 15 more drugs that will take effect in 2028. The number increases to 20 negotiated drugs per year starting in 2029.

“I think sometimes people get caught up in the fact that their medication isn’t on the list, but it will be on the list at some point in the future if they’re taking a medication that’s driving up costs,” Purvis said.

The Centers for Medicare will only choose drugs covered by Medicare Part D for the first two years of negotiations. It will add more specialty drugs covered by Medicare Part B, which are typically administered by doctors, in 2028.

Harris is likely to try to expand the scope of negotiations if she is elected president, experts told CNBC.

Purvis stressed that the Medicare program “will improve in this process as it moves forward.”

“We expect billions of dollars in savings to start flowing to taxpayers as this negotiation program gets underway and Medicare improves its drug negotiation process,” she told CNBC.