Biden administration outlines drug price negotiation plans
The Department of Health and Human Services on Wednesday released its timeline for starting Medicare prescription drug price negotiations — a key piece of Democrats' Inflation Reduction Act.
What's happening: The department will reveal in early September the first 10 high-cost drugs that will be subject to talks with manufacturers. Discussions will begin in February 2024 and the maximum negotiated prices will be announced in September 2024.
- The new prices will take effect starting on Jan. 1, 2026.
- The government will select 15 more drugs for 2027, 15 additional ones for 2028, and 20 more for each year after that.
The big picture: Under the IRA, Medicare can negotiate the prices of certain drugs that have been on the market for several years but don't have competition from generics — allowing government officials to set a ceiling for what those prices can be.
- Medicare must consider factors such as research and development costs, production and distribution costs and how the drug compares to existing alternatives.
- However, health experts warn that it is unclear how the Biden administration will define and weight those factors, Axios' Caitlin Owens reported in October.
What they're saying: "We will be transparent and aggressive in implementation every step of the way," said HHS Secretary Xavier Becerra.
Don't forget: HHS could potentially face a legal challenge to the negotiation plan, which could ultimately temporarily block or lengthen the process.
- Asked about the possibility of litigation, Meena Seshamani, the director of the Center for Medicare, said that CMS has worked with a variety of parties to ensure that the negotiation process is implemented "thoughtfully."
Go deeper: New drug law attempts to marry prices to value.