• Centers for Medicare & Medicaid Services Announces “Top 10” Costly Drugs List Selected for Price Negotiations

    Kenny Lin, MD, MPH
    Posted on September 5, 2023

    Last week, the Centers for Medicare & Medicaid Services (CMS) announced the first 10 brand name medications that it will negotiate Medicare Part D prices directly with drug manufacturers to take effect starting in 2026. Several of these medications are commonly prescribed by family physicians and were discussed in AFP’s STEPS (Safety, Tolerability, Efficacy, Price, Simplicity) New Drug Reviews feature from 2007 to 2020. Each of the listed drugs received U.S. Food and Drug Administration (FDA) approval for at least one indication before September 2016 and currently faces no generic competition.

    Apixaban (Eliquis)

    Empagliflozin (Jardiance)

    Rivaroxaban (Xarelto)

    Sitagliptin (Januvia)

    Dapagliflozin (Farxiga)

    Sacubitril/valsartan (Entresto)

    Etanercept (Enbrel)

    Ibrutinib (Imbruvica)

    Ustekinumab (Stelara)

    Insulin aspart (Novolog/Fiasp)

    Although Medicare began paying for prescription drugs in 2006, the legislation that created the Part D drug benefit prohibited the federal government from using its purchasing power to negotiate prices directly with pharmaceutical companies, which is what most government health programs in other countries implement from the time of market entry. This changed with the passage of the Inflation Reduction Act in August 2022, which not only gave CMS the authority to negotiate prices of selected brand-name drugs but also penalizes companies that increase prices faster than inflation and caps Medicare beneficiaries’ annual out-of-pocket drug spending starting in 2024.

    Manufacturers have until October 1, 2023, to decide whether they will participate in negotiations with CMS to establish a “maximum fair price” for the designated drugs in Medicare Part D or accept financial penalties for not doing so. Negotiations that will take place over the next year will ultimately establish a discounted price that is at least 25% to 60% lower than the drug’s list price. Collectively, the federal government is expected to save $100 billion over the next decade. That’s because a small number of brand-name drugs have an outsized budget impact, with the 10 most expensive drugs accounting for 22% of gross Medicare Part D spending in 2021. In addition, “spillover” effects may occur from negotiated lower prices because competitors in the same therapeutic class may decide to lower their prices or risk being left off of Part D drug formularies.

    Given potentially large financial impacts on the companies involved (Eliquis, Jardiance, and Enbrel comprise 23% to 33% of U.S. prescription drug sales of their respective manufacturers, according to STAT), the pharmaceutical industry has already filed multiple lawsuits, seeking to stop price negotiations before they take effect in 2026. Although the industry warns that less revenue could discourage innovation and new drug development, the nonpartisan Congressional Budget Office has estimated that price negotiations would have a small impact on FDA new drug approvals, with 15 fewer drugs approved over the next 30 years out of about 1,300 projected.

    The opinions expressed here are those of the authors and do not necessarily reflect the opinions of the American Academy of Family Physicians or its journals. This service is not intended to provide medical, financial, or legal advice. All comments are moderated and will be removed if they violate our Terms of Use.