The Biden administration recently made headlines by announcing a list of the first 10 drugs subject to price negotiations under Medicare. For the average American, especially those relying on Medicare, this news could mean a lot. Simply put, medication might become more affordable. But there’s much to unpack here, so let’s dive in.

The first 10 drugs: what do they treat?

The list comprises some of the most commonly prescribed medications for conditions ranging from heart disease and diabetes to cancer and autoimmune diseases. Here’s a quick rundown:

– Eliquis & Xarelto: Preventing strokes and blood clots

– Jardiance, Januvia, Farxiga: Treating diabetes and associated conditions

– Entresto: For heart failure

– Enbrel: Addresses arthritis and other autoimmune conditions

– Imbruvica: Used for blood cancers

– Stelara: Treats Crohn’s disease

– Fiasp and NovoLog: Insulin products for diabetes

These 10 medications alone accounted for a staggering 20% of Medicare Part D costs in a recent 12-month period. If you are among the millions who rely on these drugs, this initiative might be a game-changer.

Financial implications for patients

According to the Department of Health and Human Services, Medicare enrollees paid $3.4 billion out-of-pocket last year for these medications alone. If you didn’t receive financial assistance, you might have spent up to $6,500 on average. Therefore, the upcoming negotiations could potentially save you thousands of dollars.

Why is the government taking this step?

President Joe Biden put it bluntly: “Big Pharma is charging Americans more than three times what they charge other countries simply because they could.” The aim is to balance the scales, making essential medications more accessible to everyday Americans. Lowering these costs doesn’t just help your wallet; for many, it may well be a matter of life and health.

What happens next: timeline and process

The negotiated prices are expected to take effect in 2026. It’s a lengthy process, with the Centers for Medicare and Medicaid Services (CMS) scheduled to publish the agreed-upon maximum fair prices by September 1, 2024. This process takes into account multiple factors, including the drug’s clinical benefits and development costs.

The opposition: lawsuits and controversies

Not surprisingly, these proposals have seen significant push-back from the pharmaceutical companies involved, who have declared the initiative ‘unconstitutional.’ Some of the companies involved, including giants like Bristol Myers Squibb and Johnson & Johnson, have filed lawsuits to this effect in federal courts across the country.

Future impact: beyond the first 10 drugs

If successful, this initiative has the potential to expand and cover more drugs in the future. After the first round of negotiations, 15 more drugs could be negotiated in 2027 and again in 2028, with the number rising to 20 drugs a year for 2029 and beyond. 

Potential benefits and downsides

Upsides

Cost savings for Medicare

Perhaps the most significant advantage of the price negotiation initiative is the substantial cost savings it could bring to Medicare. According to the Congressional Budget Office, the program is expected to save nearly $98.5 billion over 10 years. These savings could bolster the long-term viability of Medicare, which benefits both current and future enrollees.

Lower out-of-pocket costs

Medicare enrollees who rely on these high-cost medications for chronic conditions could see dramatic decreases in out-of-pocket expenses. In a year where Medicare enrollees collectively paid $3.4 billion out-of-pocket for just these 10 medications, the impact of such reductions cannot be overstated. 

Potential for lower premiums

The overall savings to the Medicare program could result in lower premiums for all Medicare enrollees, not just those who are taking the 10 selected medications. Lower premiums would mean more disposable income for older adults, many of whom are on fixed incomes. This could improve their quality of life considerably.

Room for additional benefits

With the money saved through negotiations, Medicare could potentially expand its coverage to include additional drugs or benefits that are currently not covered. This could mean improved healthcare outcomes and increased access to cutting-edge treatments for Medicare beneficiaries. 

Beneficial for the healthcare system overall

The ripple effect of these negotiations could extend to the broader healthcare system. Savings for Medicare might lead to cost reductions in other healthcare programs and private insurance plans, as Medicare often sets the benchmark for healthcare pricing. This could potentially lower healthcare costs for Americans across the board.

The ultimate goal is to create a system that makes essential medications affordable without compromising the quality of healthcare. By striking a balance between cost and accessibility, the drug price negotiation initiative aims to make a meaningful difference in the lives of millions of Americans.

Downsides

Potential stifling of innovation

Drug companies argue that the high costs of medication are in part due to the massive investment required for research and development. A single new medication can take years of research and billions of dollars to develop. If Medicare negotiations drive down the prices too significantly, the pharmaceutical companies argue that they may not have sufficient incentive to invest in the development of new drugs. 

This could slow down medical advances and ultimately affect patient care, particularly for conditions that currently lack effective treatments.

Risk of companies withdrawing medications

Another significant risk is the possibility that pharmaceutical companies could opt to withdraw their drugs from the Medicare market entirely. This decision could be made if companies feel the negotiated prices are too low to make a reasonable profit. Should this happen, it could lead to a reduced range of available medications for Medicare enrollees, limiting their treatment options. 

Increased government control

Lastly, there is the broader issue of increased government intervention in healthcare. While many view this as a positive step toward reducing healthcare disparities, others worry that it opens the door for more government control over various aspects of healthcare, including treatments, tests, and procedures. Such control could, skeptics argue, lead to a one-size-fits-all approach to healthcare, which may not meet the unique needs of individual patients. Critics also raise constitutional concerns, arguing that the initiative could violate various amendments, including those related to property rights and free speech.

Bottom line

While the initiative is not without controversy- or potential drawbacks, as we’ve seen-  it signifies a monumental shift in the right direction for Medicare beneficiaries. The government’s efforts to negotiate the prices of these 10 critical drugs could open the door to more affordable healthcare for millions. 

So, whether you’re a Medicare beneficiary or someone who cares about the cost of healthcare, this is a development you’ll want to watch closely. The implications are vast, and the stakes are high. Your health and your wallet could depend on it.

Regardless, choosing the right Prescription Drug coverage is critical to ensure you are protected in the case that you develop any chronic condition that requires either one of the 10 drugs listed in this first negotiation or one that is not included but may be in the future.

Whether you are looking for a stand-alone prescription drug plan or a Medicare Advantage plan with drug prescription coverage, on HellaHealth you can create a profile to enter your unique healthcare needs and find a plan that matches them. You can come back every year to ensure you are on the plan that is right for you or when your needs change. Feel free to shop around and compare quotes for yourself without any pressure. Find the right plan here.  

Questions about Medicare?

Shoot us an email at medicare@hihella.com.