The Biden Administration identified the next 15 drugs to be added to Medicare’s drug price negotiation list—a final act of the outgoing administration in advance of the February 1 statutory deadline.
While President Trump’s officials have yet to make their stance public, manufacturers are now preparing for an impending deadline: February 28. This is the date for companies to declare their participation in price setting negotiations, a process outlined in the 2022 Inflation Reduction Act.
Building on Round One
The negotiations for this, the second round of drugs, are scheduled to run through October, when companies must accept or reject final offers. Final prices will take effect in January 2027.
The first round of negotiations, in 2023, targeted ten drugs with the intention of lowering costs paid by public insurers. Those prices, set to take effect in 2026, have earned mixed reactions from stakeholders.
Unintended Consequences for Access, Innovation
As with many well-intentioned policies, negotiating lower prices may foreshadow some unintended consequences.
Some patients may find their pharmacy has limited their drug stock or ceased participating in Medicare’s prescription drug program. Independent and local pharmacies, already under major strain from competing national chains and mail-order services, are planning for financial difficulties from lower reimbursements and delays in payment. Stores in underserved areas, where options for accessing prescription drugs may be limited, could be among the hardest hit.
Drugmakers, too, face consequences if the reimbursement rates are set too low.
Studies estimate research and development costs for a single new drug to be hundreds of millions of dollars. Some cost billions – expenses paid by reinvesting proceeds from existing medications. Large companies may be less inclined to invest in creating the next miracle drug, only to have the window for recouping costs slashed by Medicare. In contrast, investment in “small biotech” and biosimilars, which are exempted from negotiations, has grown substantially in recent years.
The scale of these challenges is expected to increase as the program expands to include more drugs.
Public Input is Essential
But with so much at stake, advocates, health care providers and patients should not miss their opportunities to weigh in during the negotiation process. Public comment has the potential to shape the outcome, one that needs to strike the right balance among affordability, access and innovation.
The Centers for Medicare and Medicaid will soon be releasing details on how to submit public comment, along with more information on patient listening sessions and a clinically focused virtual townhall.