Medicare to start negotiating prices for 10 drugs in 2024
Medicare to start negotiating prices for 10 drugs in 2024
In the new year, Medicare will attempt to negotiate lower drug prices for the first time ever. Until the Inflation Reduction Act was signed last year, the government wasn’t allowed to directly negotiate with drugmakers — a 2003 law prohibited it.
But soon, talks will take place as pharmaceutical companies try to stymie the process in the courts. And the stakes are high.
The Commonwealth Fund’s Gretchen Jacobson said 1 in 7 Medicare beneficiaries surveyed this year reported not filling a prescription due to cost. “Skipping prescription drugs has long-term effects on people’s health,” she said.
And more than half of those who put off care said their health problems got worse.
“This means higher costs over the long term for both Medicare beneficiaries and the Medicare program,” Jacobson said.
Drugmakers have long used monopoly power to extend their patents, according to Yale Law professor Amy Kapczynski. She said they’ve been able to set prices for years beyond what patent laws intended.
“And before something like the negotiation program, it was very hard to address those abuses,” she said.
Medicare’s new powers to negotiate drug prices will apply to just 10 medications for now, including treatments for heart disease and diabetes.
But negotiating lower drug prices will be a balancing act, said Chris Meekins of investment firm Raymond James.
“They don’t want the cuts to be so significant that it encourages companies to exit the Medicare market,” he said.
Big Pharma has thrown the kitchen sink at the effort, according to Robin Feldman, a professor at UC Law San Francisco. By her count, the industry has filed nine lawsuits.
“Together, the lawsuits claim violations of more constitutional provisions than most people knew existed,” she said.
The industry has argued that the government is taking private property for public use without “just compensation.”
But if the government prevails, the black box that is Medicare drug pricing will be a lot easier for patients to understand, said Mariana Socal of the Johns Hopkins Bloomberg School of Public Health. “Under the new Medicare negotiation plan, there will be a maximum fair price for these drugs,” she said.
Socal expects patients will see potential savings in 2026, when — legal headaches aside — those newly negotiated prices are supposed to kick in.
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