Jan 11, 2023 - Health

Biden administration outlines drug price negotiation plans

Picture of Xavier Becerra

Photo: Alex Wong/Getty Images

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.

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