John Tozzi and Nacha Cattan | (TNS) Bloomberg News
Some of the most widely used drugs in the U.S. may be heading for lower prices under Medicare, a move that could save taxpayers billions of dollars and squeeze profits for big pharmaceutical companies.
The U.S. government is preparing to release a list this week of 10 drugs that the health program for the elderly will be able to negotiate prices for — one of the key elements of President Joe Biden’s signature Inflation Reduction Act. Analysts expect Johnson & Johnson’s Xarelto blood thinner and Eli Lilly & Co.’s Jardiance for diabetes to be among the medications chosen.
The ability for the government to haggle over prices is a marked change for pharma companies that have long been able to charge whatever they think a medication is worth, even as most other industrialized companies bargain hard. With the IRA now enabling Medicare to come to the table over products that have long been on the market, drugmakers are girding for the prospect of lower revenue from some of their biggest sellers.
For taxpayers, the savings could be significant: Negotiations could save the U.S. $36.5 billion from 2026 to 2028, according to Wells Fargo Securities. Drugmakers are suing the government to stop the squeeze.
“They’re going to earn less money,” said Spencer Perlman, an analyst with policy research firm Veda Partners. “That’s just a fact.”
Medicare spends more than $200 billion on outpatient prescription drugs annually. Eliquis, the Bristol-Myers Squibb Co. blood thinner used to prevent heart attacks and strokes, cost the program more than $12 billion in 2021 alone.
Under the IRA, the price ceiling for a selected drug will be set somewhere between 75% and 40% of its average price, with steeper discounts for drugs that have been on the market longer. Medicare will halve its costs for the chosen drugs on average, according to Congressional Budget Office estimates. That will lower the health program’s…
Read the full article here
