Landon Capital

By Patrick Wingrove

(Reuters) – The Biden administration on Tuesday is expected to release its list of 10 prescription medicines that will be subject to the first-ever price negotiations by the U.S. Medicare health program that covers 66 million people.

President Joe Biden’s signature Inflation Reduction Act (IRA), signed into law last year, allows the Medicare health program for Americans aged 65 and over to negotiate prices for some of its most costly drugs.

The list will kick off the negotiation process for the 10 drugs whose new prices would go into effect in 2026. The program aims to save $25 billion per year on drug prices by 2031.

Analysts expect medicines on the list to include Merck & Co’s diabetes drug Januvia, blood thinner Eliquis from Bristol Myers (NYSE:BMY) Squibb and Pfizer (NYSE:PFE), and AbbVie (NYSE:ABBV)’s leukemia treatment Imbruvica.

“Congress has taken the pharmaceutical industry on and said it is not acceptable anymore to have prescription drug prices that are more than 250% higher than in other nations,” Democratic Senator Amy Klobuchar, who has long advocated for lower healthcare costs, said.

Drugmakers including Bristol Myers, Johnson & Johnson (NYSE:JNJ), Merck, Britain’s AstraZeneca (NASDAQ:AZN), Japan’s Astellas Pharma and Germany-based Boehringer Ingelheim, as well as business groups have sued the U.S. Department of Health and Human Services (HHS), which oversees the Medicare agency, in an effort to derail the price-setting process.

They argued that the program will hurt innovation and that it violates their rights under the First, Fifth and/or the Eighth amendments of the U.S. Constitution.

Americans pay more for prescription drugs than patients in all other developed nations. The White House responded to these lawsuits by saying nothing in the U.S. Constitution prevents Medicare from negotiating lower drug prices.

Under the program, the minimum cut from a drug’s list price will be 25%, but the government could barter for much bigger discounts.

The 10 initial drugs will have met certain criteria set out by the Medicare agency. They must be sold in pharmacies, not have substantial generic competition and have been on the market for at least nine years – 13 for more complex biotech drugs.

Once the list is out, drugmakers will have until Oct. 1 to sign agreements to participate in the talks and until Oct. 2 to submit data on their medicines, including research and development and production costs, information on patent applications and revenue and sales volume.

Unless it is blocked by a court, the Medicare agency will publish the new agreed prices on Sept. 1, 2024.

Among the lawsuits filed so far, the U.S. Chamber of Commerce – the nation’s largest business lobby group – is seeking an injunction against the price caps in an Ohio federal court.


HHS and the Biden administration will likely face additional legal challenges once the first 10 drugs have been named and more companies can be certain they will have the right to sue under U.S. law, according to AARP attorney Kelly Bagby.

Bagby recently wrote to an Ohio federal judge to support the government drug price program, arguing the U.S. Chamber’s attempt to strike it down would harm older Americans.