Because Ned Said: As the Election Looms, Will Drug Price Negotiations Sway Voters?

Ned Milenkovich, PharmD, JD;

Key Takeaways

The IRA enables Medicare to negotiate drug prices, starting with 10 high-spend drugs, effective in 2026.
Political uncertainty surrounds the IRA's future, but its cost-saving measures are popular across party lines.
The economic impact on pharmacies and drug reimbursements is uncertain, but Medicare beneficiaries are expected to save significantly.
The IRA includes a $2000 annual cap on out-of-pocket costs and a $35 monthly insulin expense cap for Medicare recipients.

Although patients hope for reduced costs, Pharma’s reaction to the IRA remains to be seen.

As the 2024 presidential election inches closer, Americans are focused on who will lead the United States next. One important consideration for older adults and others eligible for Medicare Parts B and D are the better prices negotiated as a result of the Inflation Reduction Act (IRA) of 2022.

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Under the IRA, Medicare can negotiate prescription drug prices directly with drug manufacturers to get a better deal for Medicare enrollees. As a result, Medicare has now selected the first 10 drugs for negotiation.¹ Over the next 4 years, Medicare will negotiate pricing for up to 60 drugs covered by Medicare Part B and Part D and an additional 20 drugs annually thereafter.¹ The overall economic impact on pharmacies still hangs in the balance, but it is important to ask what this will mean for drug reimbursements and, ultimately, who will be paying for this new program.

About the Author

Ned Milenkovich, PharmD, JD, is chair of the health care law practice at Much Shelist, PC and former vice chairman of the Illinois State Board of Pharmacy.

The US Department of Health and Human Services (HHS) recently announced the first 10 drugs selected for Medicare drug price negotiation. They are apixaban (Eliquis; Bristol Myers Squibb/Pfizer), empagliflozin (Jardiance; Boehringer Ingelheim Pharmaceuticals, Inc/Eli Lilly and Company), rivaroxaban (Xarelto; Janssen Pharmaceuticals, Inc), sitagliptin (Januvia; Merck), dapagliflozin (Farxiga; AstraZeneca), sacubitril/valsartan (Entresto; Novartis), etanercept (Enbrel; Amgen), ibrutinib (Imbruvica; Pharmacyclics LLC/Janssen Biotech, Inc), ustekinumab (Stelara; Janssen Biotech, Inc), and insulin aspart products (including Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill; Novo Nordisk, Inc). According to the HHS, the 10 drugs are among those with the highest total Part D spend.^1-3 Negotiations for the first group of selected drugs began in 2023, and the negotiated prices will go into effect in 2026.¹

Some pundits purport that the IRA’s measures could be eliminated in a new Trump administration, were Donald Trump to win the election. Currently, those measures permit Medicare to negotiate pharmaceutical prices, institute a $2000 annual cap on Medicare recipient out-of-pocket costs for outpatient drugs, and institute a $35 per month maximum on expenses for insulin products.¹

However, these pundits may not be correct given that this might be an area in politics where both the Trump camp and the Biden-Harris administration genuinely agree. Former President Trump has been mostly silent on reduction measures for IRA prescription drug prices, which are popular among constituents across the political spectrum, particularly the provision that grants Medicare the authority to negotiate lower drug prices with drug manufacturers. If reelected, Trump may well decide to keep this provision along with others that lower prescription drug costs for Medicare beneficiaries.

It will be interesting to see how the pharmaceutical companies handle this forced negotiation. Equally interesting will be the ultimate impact on the dispensing pharmacy and whether it will realize a net shortfall or a gain when dispensing drugs that are subject to negotiated prices. As the list of drugs grows and Americans become more dependent on the broader range of negotiated drug prices, it will likely become very unpopular for any elected officials to repeal the reduction aspects of the IRA. This is particularly true given that Part D enrollees will no longer pay 5% coinsurance when they reach the catastrophic phase of their benefit starting in 2024 and given that close to 19 million older adults and other Part D beneficiaries will save when the out-of-pocket cap drops to $2000 in 2025. Notably, the 1.9 million enrollees with the highest drug costs will save at least $1000 in 2025 under the IRA.¹

REFERENCES

1. US Department of Health and Human Services. Medicare Drug Price Negotiation Program: Understanding Development and Trends in Utilization and Spending for the Selected Drugs. US Dept of Health and Human Services; 2023. Accessed September 20, 2024. https://aspe.hhs.gov/sites/default/files/documents/4bf549a55308c3aadc74b34abcb7a1d1/ira-drug-negotiation-report.pdf

2. Fact sheet: Biden-Harris Administration announces new, lower prices for first ten drugs selected for Medicare price negotiation to lower costs for millions of Americans. The White House. August 15, 2024. Accessed September 20, 2024. https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/15/fact-sheet-biden-harris-administration-announces-new-lower-prices-for-first-ten-drugs-selected-for-medicare-price-negotiation-to-lower-costs-for-millions-of-americans/

3. Gallagher A. CMS announces negotiated prices for 10 drugs under Inflation Reduction Act. Pharmacy Times. August 15, 2024. Accessed September 20, 2024. https://www.pharmacytimes.com/view/cms-announces-negotiated-prices-for-10-drugs-under-inflation-reduction-act