The Department of Health and Human Services (HHS) in the US has released a list of the first 10 medicines that will be subject to a novel mechanism for negotiating drug prices under the Medicare health insurance program starting from the 2026 period onwards. The institution plans to publish the agreed-upon prices on September 1, 2024, following discussions with manufacturers between 2023 and 2024. The negotiations will consider each product’s clinical benefit, unmet medical need, patient impact, and research, development, and distribution costs.
Impact on Medicare Out-of-Pocket Costs and Industry
The 10 treatments accounted for USD 3.4 billion in out-of-pocket costs for Medicare members last year and generated USD 50.5 billion in outlays for Medicare between June 2022 and May 2023, representing 20% of the health plan’s prescription drug coverage costs. This criterion was used for the selection of drugs for inclusion in the mechanism.
Local Firm Janssen and Big Pharma Companies Affected
The price cuts will particularly affect local firm Janssen, which has three of its products included in the scheme. Among the nine Big Pharma companies impacted, AstraZeneca (AZ, NASDAQ: AZN), BMS (NYSE: BMY), Johnson & Johnson (J&J, NYSE: JNJ) – Janssen, and Merck, Sharp & Dohme(MSD, NYSE: MRK) anticipated their drugs being targeted and have engaged in legal battles against the government initiative in recent months, according to Fineline Info & Tech data.
HHS’s Commitment to Expanding Price Negotiations
HHS has indicated that it will incorporate up to 15 more drugs for 2027 coverage, up to 15 for 2028, and then up to 20 annually. HHS Secretary Xavier Becerra has stated that the institution will not be deterred by the industry’s attempts to block the price-setting scheme, demonstrating a firm commitment to controlling prescription drug costs under Medicare.-Fineline Info & Tech
