Drugmakers Agree to Participate in Medicare Drug Price Negotiations

All drugmakers of the first 10 medicines selected for Medicare drug price negotiations have agreed to participate in the talks, despite previous lawsuits filed against the process. The companies confirmed their participation in separate statements to CNBC. President Joe Biden’s Inflation Reduction Act granted Medicare the authority to negotiate drug prices for the first time in its history. The negotiations, which aim to make expensive medications more affordable for older Americans, will continue until August 2024, with reduced prices taking effect in January 2026.

The deadline for the pharmaceutical companies to sign an agreement to engage in the negotiations was Sunday, and Monday is the deadline for them to submit economic and market information on their drugs. The penalties for not participating in the negotiations include paying a high excise tax or withdrawing all products from the Medicare and Medicaid markets.

While some drugmakers argue against the negotiations, stating concerns about revenue growth, profits, and drug innovation, analysts predict minimal financial losses initially, as many of the selected drugs already face upcoming patent expirations. CMS will hold meetings with the companies to discuss the data they submitted and will also gather information from consumer and patient organizations to develop initial price offers.

The negotiations are expected to save Medicare an estimated $98.5 billion over a decade, providing cost savings for people enrolled in Medicare who struggle with out-of-pocket expenses for prescription drugs. The talks will cover Medicare Part D drugs initially, with the inclusion of Medicare Part B drugs in 2028.

Overall, the participation of all drugmakers in the negotiations marks a significant step towards addressing the affordability of medications for older Americans and achieving cost savings within the Medicare program.