On Friday, the U.S. Department of Health and Human Services (HHS) unveiled the selection of 15 additional drugs covered under Medicare Part D for price negotiations, building on efforts to reduce prescription drug costs.
These negotiations, mandated by the Inflation Reduction Act, will take place in 2025, with the new prices slated to take effect in 2027.
The selected drugs, used to treat conditions like cancer, diabetes, and asthma, represented approximately $41 billion in Medicare Part D costs between November 2023 and October 2024, accounting for 14% of the program's total expenses.
Under the finalized guidance for the second negotiation cycle, drug manufacturers have until February 28, 2025, to decide on their participation.
The selected drug list for the second cycle of negotiations is:
- Novo Nordisk's (NYSE:NVO) diabetes and weight loss drugs, Ozempic, Rybelsus, and Wegovy.
- Pfizer Inc.'s (NYSE:PFE) Ibrance for breast cancer and Xtandi for prostate cancer.
- GSK Plc's (NYSE:GSK) Asthma and Chronic obstructive pulmonary disease treatment Trelegy Ellipta and Breo Ellipta.
- Teva Pharmaceutical Industries Ltd.'s (NYSE:TEVA) Huntington's disease and Tardive dyskinesia drug Austedo, Austedo XR.
- Abbvie Inc.'s (NYSE:ABBV) irritable bowel syndrome treatment Linzess and depression drug Vraylar.
- Bristol-Myers Squibb Co's (NYSE:BMY) Pomalyst for a type of blood cancer.
- Boehringer Ingelheim's lung disease drug Ofev and diabetes med Tradjenta.
- AstraZeneca Plc’s (NASDAQ:AZN) cancer drug Calquence
- Salix Pharmaceuticals' irritable bowel syndrome drug Xifaxan
- Merck & Co Inc's (NYSE:MRK) diabetes drug Janumet; Janumet XR.
- Amgen Inc's (NASDAQ:AMGN) psoriasis drug Otezla
CMS will evaluate factors such as the drug's clinical benefit, its role in addressing unmet medical needs, and its impact on specific populations, alongside considerations for research, production, and distribution costs.
The first negotiation cycle in 2023 resulted in agreements for price reductions on 10 drugs, with discounts ranging from 38% to 79% off list prices.
The new prices, effective January 2026, are expected to save $6 billion in prescription drug costs annually and reduce out-of-pocket expenses for Medicare beneficiaries by an estimated $1.5 billion.
Looking ahead, CMS plans to expand the program, selecting up to 15 additional drugs for the third cycle and 20 more in subsequent cycles. The Inflation Reduction Act also introduces an out-of-pocket cap of $2,000 for Medicare Part D enrollees starting in 2025. Approximately 11 million beneficiaries are expected to benefit from the cap, saving a projected $7.2 billion annually.
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