In August of 2022, President Biden signed the Inflation Reduction Act (IRA) into law. The law aimed to increase incentives for clean energy and mitigate climate change by investing approximately $300 billion in deficit reduction and $369 in energy security and climate change programs for the next 10 years.1 Additionally, this bill was historic in that it was the first time the Secretary of Health and Human Services was allowed to negotiate fair prices for prescription drugs for Medicare.1
On April 30, 2023, the Centers for Medicare and Medicaid Services (CMS) released its initial guidance for how Medicare intends to use its new authority to effectively negotiate with drug companies for lower prices on selected high-cost drugs.2 On September 1, 2023, CMS published the first 10 Medicare Part D drugs that were selected for price negotiations with the negotiated prices to be effective in 2026. The negotiated maximum fair prices for those selected drugs will be subsequently released on September 1, 2024.3
Going forward, CMS will select up to 15 Part D drugs for 2027 for price negotiations and for each year thereafter.3 The negotiation process focus on key questions, including but not limited to the selected drug’s clinical benefit, the extent to which it fulfills an unmet medical need, and its impact on people who rely on Medicare. As a result of the negotiations, people with Medicare will have access to innovative, life-saving treatments at costs that are lower for both them and Medicare.
The challenges that came with such a bold step were a range of lawsuits, challenging the constitutional, statutory and agency authority of the negotiation program.4 Thus far, every district court judge has rejected the pharmaceutical industry’s arguments against the negotiation. Barring any court orders to block the Administration, final negotiated prices for the first 10 drugs will be published by September 1, 2024, and these prices will go into effect on January 1, 2026.2 Even though the Biden Administration seems to be the winner at this time, litigations are still ongoing and anything can change at any moment.
Author Bio:
Rasha Abdrabou, DrPH, MPH
Dr. Abdrabou is the Chair of the Physician Assistant Sciences Department in the School of Allied Health as well as the Program Review and Assessment Director. She is also an Assistant Professor for the department. Her research interests include the opioid crisis and its implications for different populations, food insecurity and health policies on food quality.
References
- https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_one_page_summary.pdf
- https://www.govinfo.gov/content/pkg/FR-2024-05-06/pdf/2024-09750.pdf
- https://www.hhs.gov/about/news/2023/03/15/hhs-releases-initial-guidance-historic-medicare-drug-price-negotiation-program-price-applicability-year-2026.html
- https://www.healthaffairs.org/content/forefront/another-administration-win-medicare-drug-price-negotiation-lawsuits