U.S. Makes Initial Offers in Medicare Drug Price Negotiations

The News

The Biden administration announced on Thursday that it was sending initial offers to the makers of the first 10 prescription drugs that have been selected for price negotiations with Medicare under a landmark federal program intended to reduce drug spending.

Why It Matters: The price offers kick off negotiations.

The medicines selected for negotiations are taken by millions of older Americans to treat conditions like diabetes, cancer and heart failure. The administration identified them in August, beginning a lengthy process intended to result in an agreed-upon price that would take effect in 2026, assuming the negotiation program survives legal challenges.

The initial round of price offers is a key step in the negotiation process. Each drugmaker has until early March to accept the offer or propose a counteroffer to the government. A series of negotiation sessions could follow, with the process set to conclude by August.

Health policy experts said the announcement of the initial round of offers amounted to a kind of starting gun, giving the Biden administration the chance to take an aggressive posture and test the willingness of drugmakers to acquiesce.

The proposals help in “setting the tone for the rest of this back and forth,” said Andrew W. Mulcahy, a health economist at the RAND Corporation who has advised the Biden administration on the implementation of the drug price negotiations.

The drugs subject to price talks include Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica and Stelara. Fiasp and NovoLog insulin products were also selected. The administration did not publicly reveal how much it was offering for the medications, which are covered under Medicare’s program for prescription drugs that patients take at home, known as Medicare Part D.

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