New report provides an in-depth review of the 10 drugs selected for the first cycle of Medicare drug price negotiations under President Biden’s Inflation Reduction Act (IRA).

As part of its effort to lower prescription drug prices for America’s seniors and people with disabilities, the U.S. Department of Health and Human Services (HHS) today issued a new report that provides an in-depth review of the 10 drugs selected for the first cycle of Medicare drug price negotiations under President Biden’s Inflation Reduction Act (IRA). The report, from the Office of the Assistant Secretary for Planning and Evaluation (ASPE), reviews the common conditions treated by the selected drugs, including key health disparities associated with these conditions. The report explores current utilization and spending trends for each of the 10 drugs over a 5-year period. Additionally, the new research details whether these drugs received certain types of federal contributions and support for their development.

“Thanks to President Biden’s lower cost prescription drug law, Medicare finally has the ability to negotiate fair drug prices for the Medicare program and for the people who rely on it. Some of these drugs were developed with support from taxpayers, and we should get the benefits of that investment by not having to pay exorbitant prices for prescription drugs,” said Secretary Becerra. “This new data shows exactly why negotiation is so important for hardworking Americans. This Administration is laser focused on making health care more affordable and accessible.”

“These first 10 drugs make up nearly 20 percent of spending in the Medicare Part D drug benefit,” added Rebecca Haffajee, Principal Deputy Assistant Secretary for ASPE. “Negotiating prices on these drugs has the potential for significant savings to enrollees, taxpayers, and the Medicare program. As additional drugs are selected for negotiation in future years, the benefits of negotiation will continue to grow.”

The research found that total Medicare Part D spending on the 10 prescription drugs selected for negotiation more than doubled from 2018 to 2022. The rate of growth in spending for these 10 drugs is more than three times as fast as for all Part D drugs over the same period. The report finds that 7 of the 10 drugs selected for negotiations received at least one form of federal support towards their drug development or utilized a federally funded invention.

Additionally, the Centers for Medicare & Medicaid Services (CMS) released a list of 48 prescription drugs for which Part B beneficiary coinsurances may be lower between January 1, 2024 – March 31, 2024 because of the Inflation Reduction Act’s inflation rebate provision. Because of the law, companies that raise drug prices faster than inflation are required to pay rebates back to Medicare. Some people with Medicare who take these 48 drugs may save between $1 and $2,786 per average dose starting January 1, 2024, depending on their individual coverage.

Also today, CMS released revised guidance for the Medicare Prescription Drug Inflation Rebate Program detailing key requirements and procedures for invoicing manufacturers that owe rebates to Medicare. Alongside this guidance, today, CMS wrote a letter to leading insurers and pharmacy benefit managers encouraging them to ensure adequate payment for and access to vaccines, like COVID-19 and RSV; engage in sustainable and fair practices with all pharmacies; and check their processes and systems to ensure they are providing full coverage, without cost sharing, for preventive services, among other asks.

To complement this latest release, ASPE also released a fact sheet detailing which drugs and biological products met the criteria to trigger a coinsurance adjustment under the Inflation Reduction Act’s Medicare Part B inflation rebate provisions for Calendar Year 2023. In 2023, 47 drugs covered under Medicare Part B had reduced coinsurance rates in at least one calendar quarter due to inflation-adjusted rebate payments. Medicare enrollees may experience coinsurance amounts that are as much as $618 lower per average dose than what they would have paid without the coinsurance adjustment.

Finally, the Administration for Strategic Preparedness and Response (ASPR) is making fair pricing a standard part of contract negotiations for medical products developed or purchased as part of its commitment to obtain best value for the US taxpayer. In September 2023, ASPR finalized a Project NextGen contract agreement for a potentially life-saving COVID-19 treatment being developed by Regeneron stating if the product is commercialized, its list price in the United States will be equal to or less than its retail price in comparable global markets. Since then, ASPR has also included similar language in recent agreements with CastleVax, Codagenix and Gritstone Bio, developers of the first three vaccines selected for development within Project NextGen. These clauses will be in effect if and when a company’s candidate vaccine is selected to move into ASPR-supported Phase 2b trials to evaluate clinical safety and efficacy. These actions are the result of a successful and collaborative approach by ASPR and its industry partners and show HHS’s commitment to keep Americans from paying unfair prices for the care they need.

Together, these measures will reduce out-of-pocket costs for Americans, especially so for seniors and people with disabilities who rely on Medicare prescription drug coverage for life-saving medications, while also saving money for the Medicare program, thanks to the Inflation Reduction Act.

Key points from the ASPE report include the following:

• The 10 drugs covered under Part D selected for the first cycle of Medicare drug price negotiations are: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and NovoLog/Fiasp. Millions of Medicare enrollees take one or more of these drugs to treat serious conditions, such as blood clots, diabetes, cardiovascular disease, heart failure, autoimmune conditions, and chronic kidney disease.
• The federal government, most prominently the National Institutes of Health (NIH), supports biomedical research relevant to the discovery and development of new drugs. Seven of the 10 drugs selected for negotiation received at least one form of federal support towards their drug development or utilized a federally funded invention.
• As required by the IRA, selected drugs need to have been approved or licensed by the Food and Drug Administration (FDA) for a considerable amount of time to be eligible for negotiation: Enbrel has been licensed longest (nearly 25 years as of September 1, 2023 when the list of 10 drugs selected for the first cycle of drug price negotiations was required to be published), while Entresto has been approved the shortest (about 8 years as of September 1, 2023).
• Total Medicare Part D gross drug spending on the selected drugs was $46.4 billion in 2022, which represented about 19 percent of total Part D gross spending in 2022. Annual total gross spending per enrollee was highest for Imbruvica ($129,000) and lowest for NovoLog/Fiasp ($3,300) in 2022.
• Total Medicare Part D gross spending for the 10 selected drugs more than doubled from 2018 to 2022, going from about $20 billion to about $46 billion, an increase of 134 percent. The rate of growth in spending for these 10 drugs was more than 3 times as fast as for all Part D drugs over the same period.
• Overall, for enrollees who take at least one of the selected drugs, spending on the selected drugs represented about 52 percent of average annual out-of-pocket spending per enrollee on all of their Part D covered drugs.
• Over five million people with Medicare report they struggle to afford their prescriptions, with the share of Black and Latino enrollees reporting affordability challenges about 1.5 to 2 times higher than their White counterparts.

The full HHS report, “Medicare Drug Price Negotiation Program: Understanding Development and Trends in Utilization and Spending for the Selected Drugs” is part of the ongoing Inflation Reduction Act series and is available at https://aspe.hhs.gov/reports/ira-research-series-medicare-drug-price-negotiation-program

The CMS Inflation Rebate Revised Guidance Fact Sheet is available at https://www.cms.gov/files/document/fact-sheet-medicare-prescription-drug-inflation-rebate-revised-guidance.pdf.

The CMS Reduced Coinsurance for Certain Part B Rebatable Drugs (January 1 – March 31, 2024) Fact Sheet is available at https://www.cms.gov/files/document/fact-sheet-part-b-coinsurance-q1-2024.pdf

CMS Medicare Part B Inflation Rebate Program Revised Guidance is available at https://www.cms.gov/files/document/medicare-part-b-inflation-rebate-program-revised-guidance.pdf.

CMS Medicare Part D Inflation Rebate Program Revised Guidance is available at https://www.cms.gov/files/document/medicare-part-d-inflation-rebate-program-revised-guidance.pdf.

The CMS letter to plans and pharmacy benefit managers is available at https://www.cms.gov/newsroom/fact-sheets/cms-letter-plans-and-pharmacy-benefit-managers.

The ASPE fact sheet detailing which drugs and biological products met the criteria included in the Inflation Reduction Act’s Medicare Part B inflation rebate provisions for Calendar Year 2023 is available at https://aspe.hhs.gov/reports/ira-research-series-medicare-part-b-inflation-rebates.