A provision in the Inflation Reduction Act that allows Medicare to negotiate. The price of the most expensive prescription drugs. Each year would. Likely save the U.S. billions of dollars — unless the drug industry intervenes, according. To a study published Friday at the JAMA Health Forum.
Beginning in 2026, Medicare will begin price negotiations for the 10 drugs. That the federal government spends the most money on. Followed by 15 more drugs in 2027, 15 more drugs in 2028, and 20 more drugs each year thereafter.
Researchers at Brigham and Women’s Hospital and Harvard Medical School estimated how much money the U.S. would have saved if the new policy had been. In effect from 2018 to 2020 — the most recent years for which Medicare spending data is available.
They identified 40 drugs that would be selected by Medicare for drug pricing negotiations under. The provisions of the Inflation Reduction Act.
Under the policy, the negotiation process applies to drugs that have been on the market for a fixed period of time — nine years. For generics and 13 years for biologics — and only if there are no comparable alternatives to the drug, such as generics.
Most of the drugs on the list from 2018 to 2020 were paid for under Part D — the Medicare benefit. That covers prescription drugs taken at home — although some. Were under Part B — the Medicare benefit that covers drugs given in hospitals or infusion centers.
The researchers modeled negotiated prices using a so-called ceiling price, which is at least a 25% discount. From the average price drugmakers charge to private entities such. As private health insurance providers. According to the law of disinflation, the maximum negotiated price must fall below this maximum price.
The researchers found that the Medicare drug negotiation provision saved $26.5 billion. Or 5% of all drug spending, over those three years.
“That’s a pretty significant reduction in costs from a very small numberf drugs,” said the study’s lead author, Dr. Benjamin Rome. Aprimary care physician at Brigham and Women’s Hospital. And an instructor at Harvard Medical School.
Robin Feldman, a pharmaceutical and intellectual property law expert. At the University of California College of Law, San Francisco (formerly. The University of California, Hastings), said the study “shows what’s possible. Assuming the drug industry doesn’t weaken. Effect before the law comes into force.
“Drug companies will likely fight mightily against the interpretation of every provision. To keep the hammer from falling on their drugs,” said Feldman, who was not involved in the research.
The Centers for Medicare and Medicaid Services said earlier this month that it is still working on plans. For exactly how to implement negotiations with drugmakers. It plans to release a list of the first 10 drugs targeted for drug pricing talks by September
Meanwhile, Tricia Newman, a Medicare expert at KFF. Formerly known as the Kaiser Family Foundation. Said many in the drug industry. Are likely looking for ways to avoid provisions that affect their ability to maintain high profits.
Rome, the study’s author, said one way drug companies can circumvent the law is to allow. A select few manufacturers to make generic versions of their drugs they are willing to negotiate.
They can avoid negotiations through “evergreening,” he said, which occurs when. A drugmaker makes incremental changes to their product and then reintroduces it to the market as. A reformulated version.
It should provide “very, very steep discounts,” he said.