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Biden admin lays out Medicare drug negotiation process

Illustration of medical pills with half of the capsule created from paper money.

Illustration: Rae Cook/Axios

The Biden administration on Wednesday began fleshing out how it will implement drug-pricing provisions in the Inflation Reduction Act, including a multi-step negotiation process for selected Medicare drugs starting next year.

Why it matters: The law gave the administration discretion to work out many details of the first-ever drug price talks, which will initially cover 10 Part D drugs for which there’s no generic competition.

Details: The guidance envisions the Centers for Medicare and Medicaid Services accepting one counteroffer from the manufacturer and holding one to three in-person or virtual meetings with the company before settling on a “final maximum fair price offer.” Negotiations would end by Aug. 1, 2024.

  • The negotiated price would become effective in 2026. Companies that don’t comply will be hit by an excise tax.

What they’re saying: “By considering factors such as clinical benefit and unmet medical need, drug price negotiation intends to increase access to innovative treatments for people with Medicare,” CMS administrator Chiquita Brooks-LaSure said in a statement.

The administration earlier on Wednesday identified 27 drugs that will trigger penalties on their manufacturers under a separate part of the IRA for having prices that rose faster than inflation. Those inflation rebates on will take effect in April.

  • The medicines included AbbVie’s blockbuster anti-inflammatory drug Humira and the CAR-T cancer treatment Yescarta from Gilead.
  • CMS said Medicare recipients with Part B coverage who take the drugs could save between $2 and $390 per average dose starting April 1, depending on their circumstances.

The other side: “Despite the rhetoric we always hear, the administration’s own report shows that prices for the vast majority of Part B medicines are not skyrocketing,” said Brian Newell, spokesperson for the big drug industry trade group PhRMA.

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