Biden Administration Announces First 10 Negotiated Medicare Drug Prices
In a coup for the Biden administration, all manufacturers of the ten drugs subject to negotiation for 2026 either agreed to prices or decided to stay in the Medicare prorgam when a price was imposed. The administration and the Centers for Medicare and Medicaid Services (CMS) say that, if the new prices had been in effect last year, Medicare would have saved an estimated $6 billion, or approximately 22 percent, across the ten selected drugs. The negotiated prices range from 38 to 79 percent discounts from list prices.
About nine million people with Medicare use at least one of the ten drugs. In addition to government savings, Medicare beneficiaries with prescription drug coverage will see savings of $1.5 billion in their personal out-of-pocket costs in 2026.
The drugs accounted for $56.2 billion in Medicare spending, or about 20 percent of total Part D gross spending in 2023.
The Congressional Budget Office (CBO) estimated $100 billion in savings over 10 years from drug negotiations, and a $3.7 billion savings in the first year. So the first-year negotiations could save more.
The journey for Medicare drug price negotiations (passed as part of the Inflation Reduction Act) continues with CMS selecting up to fifteen more drugs covered under Part D for negotiation for 2027 by February 1, 2025. This will continue with up to fifteen more drugs covered by Part B or Part D for 2028, and up to 20 more Part B or Part D drugs for each year after that.
The real issue is while savings from the list prices are between 38 and 79 percent, what will the net savings be? Because prices are now set, brand drug makers will no longer give rebates to the pharmacy benefits managers (PBMs) at the level they did before if at all. But based on estimates of rebates, the final pricing is still a substantial savings. Before the announcement, analysts at JPMorgan suggested the negotiated prices could be on average 40% lower, which is greater than the 22 percent announced by CMS. Still, PBMs often keep portions of rebates, consumers don’t see the rebate relief at the point of sales, and this provides for a much more transparent model more along the lines of generic drugs.
Other concerns revolve around whether pharmacy benefits managers could restrict access to the drugs in favor of others with rebates. CMS says it will use a comprehensive formulary review process to prevent this abuse that would undermine patient access.
CMS announcement materials: https://www.cms.gov/newsroom/press-releases/negotiating-lower-drug-prices-works-saves-billions and https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026 and https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf
Additional articles: https://www.modernhealthcare.com/politics-policy/biden-medicare-drug-price-negotiations-pharmaceutical-costs-abbvie-merck-amgen and https://www.healthcaredive.com/news/medicare-drug-price-negotiations-results/724320/ and https://www.beckershospitalreview.com/pharmacy/cms-negotiated-drug-prices-12-notes.html and https://thehill.com/homenews/4829155-medicare-drug-price-negotiations/ and https://thehill.com/policy/healthcare/4828633-medicare-negotiations-6-billion-savings/ and https://www.managedhealthcareexecutive.com/view/questions-remain-about-whether-negotiated-drug-prices-will-save-money and https://www.managedhealthcareexecutive.com/view/hhs-releases-prices-for-medicare-negotiated-drugs and https://insidehealthpolicy.com/daily-news/cms-drug-negotiations-beat-cbo-expectations-price-cuts-38-79-percent
(Some articles may require a subscription.)
#ira #drugpricing #branddrugmakers #medicareadvantage #partd #pdp #cms
What Would Harris And Trump Do On Medicare Advantage
A good review of the difference between Harris and Trump on Medicare Advantage (MA). I did a blog on this here: https://www.healthcarelabyrinth.com/will-insurers-do-better-under-a-harris-or-trump-administration/ . I have a podcast coming out soon.
The article covers the following from a virtual symposium of experts:
- Trump Healthcare Chief Alex Azar says Democrats will be hurt by MA cuts coming out in October. He called massive overpayment reports nonsense and said that Trump would safeguard MA.
- Others said at a symposium that neither administration would give MA a free pass, but neither would hamper growth in the program.
- Harris might seek to add benefits to the traditional program.
- Azar does not believe Trump will make radical changes to the Affordable Care Act (ACA), but that the GOP would not extend the enhanced premium subsidies.
- Trump would change and rein in Medicaid policy while Harris would continue expansion efforts.
- Azar thinks Trump would not repeal Medicare price negotiations and would continue down his reform road too.
#election2024 #harris #trump #healthcare #medicareadvantage
https://www.medpagetoday.com/washington-watch/electioncoverage/111545
Other Drug Coverage
A The Hill article addresses the debate over who cut the price of insulin. The truth is both the Trump and Biden administrations did so. Trump got it rolling with a pilot in the Part D program. Biden made it big through the Inflation reduction Act (IRA).
A new study on weight-loss drugs in Medicare says Medicare spending could increase between $3.1 billion and $6.1 billion annually if GLP-1 drugs were extended to just those who are overweight or obese. But a previous study said costs could be 26.1 billion annually.
Kamala Harris would expand the $35 cap on insulin prices and a $2,000 year cap on out-of-pocket prescription drug spending to all Americans.
Study: https://www.healthaffairs.org/doi/10.1377/hlthaff.2024.00356
Additional articles: https://www.beckerspayer.com/payer/weight-loss-drugs-could-cost-medicare-6b-a-year-study.html and https://insidehealthpolicy.com/daily-news/biden-harris-presidency-would-expand-insulin-out-pocket-caps-private-market
(Some articles may require a subscription.)
#weightlossdrugs #medicare #partd #insulin
https://thehill.com/policy/healthcare/4829873-trump-biden-insulin-price-cap
Aon Says Employer Health Costs To Increase
Consulting firm Aon says employer-sponsored health plan costs will rise 9% in 2025 and hit more than $16,000 per employee before cost-saving measures.
(Article may require a subscription.)
#employercoverage #healthcare
https://www.modernhealthcare.com/insurance/employer-health-plan-costs-aon-2025
Healthcare Bankruptcies To Drop in 2024
Healthcare company bankruptcy filings will slow in 2024. Twenty-nine companies with liabilities of more than $10 million filed for Chapter 11 bankruptcy protection in the first half of the year. Projected to year end, this could be a 27% decrease from 2023.
(Article may require a subscription.)
#healthcare
https://www.modernhealthcare.com/finance/healthcare-bankruptcy-gibbins-advisors-2024
Exchanges Are A Bright Spot For Insurers
With health plans hit with issues in Medicare Advantage (MA) and Medicaid, the Exchanges have been a bright spot for insurers. They have seen rising enrollment and lower risk. The enhanced premium subsidies have helped as well. A Harris administration would seek to extend them, while a Trump administration would not.
(Article may require a subscription.)
#exchanges #aca #obamacare #healthplans #insurers
https://insidehealthpolicy.com/daily-news/exchange-plans-bright-spot-many-large-insurers
Disconnect On Medicaid Risk and Rates
Large insurers are saying that the gap between the Medicaid funding they get and the risk of enrollees is worsening as Medicaid redeterminations wind down. The funding shortfall widened in Q2. Plans do expect a rebalance later this year and most are doing well with Exchanges.
(Article may require a subscription.)
#exchanges #medicaid #managedcare
Financial State Of Insurers
Healthcare Dive has a good article on the state of insurers, margins, and continuing Medicare Advantage and Medicaid woes.
#medicareadvantage #medicaid #managedcare #healthplans #insurers
— Marc S. Ryan
