Prescription Drug Costs

On October 3, the U.S. Department of Health and Human Services (HHS) announced that all 10 drug companies whose drugs were selected for price negotiation with Medicare for the first cycle of the program have decided to participate in those negotiations. These selected drugs accounted for $50.5 billion in total Part D gross covered prescription drug costs, or about 20%, of total Part D gross covered prescription drug costs between June 1, 2022, and May 31, 2023, which is the time period used to determine which drugs were eligible for negotiation. According to HHS, Medicare enrollees taking the 10 drugs covered under Part D selected for negotiation paid a total of $3.4 billion in out-of-pocket costs in 2022 for these drugs.

The Centers for Medicare & Medicaid Services (CMS) recently announced the first 10 drugs covered under the Medicare Part D prescription drug benefit selected for negotiation. As a result of the Inflation Reduction Act (P.L. 117-169), Medicare, for the first time, has the ability to directly negotiate prices of certain high expenditure, single source drugs without generic or biosimilar competition, based on total gross covered prescription drug costs under Medicare Part D and other criteria as required by the law. The negotiations with participating drug companies will occur in 2023 and 2024, and any negotiated prices will become effective beginning in 2026. The negotiation process will consider the selected drug’s clinical benefit...