Pillmakers agree to lower prices, White House says

The Biden administration on Thursday claimed credit for negotiating lower prices for 10 of the most expensive medicines used by more than 50 million people enrolled in Medicare Part D. The Department of Health and Human Services has the authority to negotiate the prices of prescription drugs under the Inflation Reduction Act of 2022, the White House said. Critics of the negotiations have characterized them as government price-fixing.

The price cuts will go into effect in 2026, according to the administration. The price for Januvia, a diabetes medicine, will drop the most of the 10 drugs in terms of percentage, by 79 percent. Imbruvica, used to treat blood cancers, will drop the least, by 38 percent.

What are the details here? The administration projects the price cuts will save the government $6 billion as Medicare’s share of the prices decrease. Medicare Part D enrollees could directly save as much as $1.5 billion total, the administration said. The 10 pharmaceuticals treat conditions such as diabetes, heart disease, blood-borne cancers, blood clots, and arthritis. The administration said it plans to negotiate down the prices of other drugs in the years ahead.

What does the other side of the aisle have to say? Heritage Foundation Senior Research Fellow Robert Moffit believes that government price-fixing will discourage manufacturers from investing in the development of new medicines.

The Republican-led House Oversight and Accountability Committee earlier this year released a report attributing high medicine prices to anticompetitive strategies used by Pharmacy Benefit Managers. PBMs, as the report referred to them, serve as the intermediaries between drug manufacturers and insurance providers. The committee’s report followed hearings in May and September of last year where experts in the industry faced questions from both sides of the aisle about how prescription drug costs got so high.

Dig deeper: Read my report in The Sift about how two out of every five cancer cases in adults arise from changeable lifestyle choices.