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5 Facts about Medicare’s Prescription Drug Price Negotiation Program

September 12, 2023

The Biden administration recently announced the first 10 drugs selected for the Medicare’s prescription drug price negotiation program.

The drugs, which are single-source products with no generic alternatives, are commonly used for diabetes, blood clotting, heart failure, Crohn's disease, and arthritis. The price negotiation program is a key component of the Inflation Reduction Act, but it has faced legal scrutiny from the pharmaceutical industry and the U.S. Chamber of Commerce to prevent it from moving forward.

“Affordability of prescription drugs is a challenge for many Medicare enrollees, with nearly half of all Medicare enrollees estimated to have annual incomes below $30,000 in 2019,” the federal Office of Health Policy noted in a fact sheet.

Here’s five things to know about the program from the Office of Health Policy:

  • Medicare common conditions:  About one in 10 Medicare enrollees have heart conditions that put them at risk for blood clots; 28 percent have diabetes, about 27 percent of enrollees have coronary heart disease; and 15 percent have been diagnosed with heart failure.
  • Most common drugs:  Eliquis (blood clots), Jardiance (diabetes and heart failure), and Xarelto (blood clots and coronary artery disease) have the highest number of Medicare Part D enrollees who used each drug during 2022. During 2022, the total out-of-pocket spending for these drugs was $1.55 billion, $383 million, and $591.6 million, respectively.
  • Pennsylvania perspective:  In Pennsylvania, Eliquis, Jardiance, and Xarelto were the most used products among Medicare Part D enrollees, with mean out-of-pocket costs of $431, $312, and $437.
  • Out-of-pocket costs:  Imbruvica (blood cancer treatment) had the highest average out-of-pocket spending per enrollee at $6,497. NovoLog (diabetes) had the lowest at $261.
  • What to watch:  This is the first phase of the program, with 15 additional Part D drugs to be selected for 2027, and another 15 Part B and Part D drugs for 2028. The program could expand to up 20 drugs annually after that.

Manufacturers have until October to sign agreements to participate in program. Following negotiations, CMS would publish agreed-upon negotiated prices for the selected drugs by September 1, 2024, with those prices effective January 1, 2026.

The federal Office of Health Policy provides additional insights about the selected products online.