Delaying Drug Price Negotiations = More Big Pharma Price Gouging
Prohibiting Access to Negotiated Prices for 13 Years Would Cost Medicare Beneficiaries and Taxpayers Tens of Billions of Dollars
Delaying Drug Price Negotiations = More Big Pharma Price Gouging
Key takeaway:
Big Pharma Is pushing for measures in the Republican reconciliation bill to undermine Medicare drug price negotiation and let Big Pharma corporations price gouge for longer periods, potentially costing taxpayers and patients tens of billions of dollars.
Background
- The Inflation Reduction Act (IRA) for the first time empowers Medicare to negotiate drug prices directly with pharmaceutical manufacturers.
- The Congressional Budget Office (CBO) estimated that in the first six years negotiated drug prices are available through Medicare, the government will save nearly $100 billion.
- Medicare enrollees will save billions more through lower premiums and reduced out-of-pocket costs that stem from negotiations.
- Medicare has already negotiated lower prices for 10 drugs, and this year it is negotiating with manufacturers of 15 more drugs to obtain lower prices, including with Novo Nordisk on Ozempic and Wegovy prices.
Big Pharma aims to Undermine Drug Price Negotiations
- Now drug corporations are pushing to gut the law so patients would be forced to wait years longer before receiving price relief on expensive drugs.
- When Congress passed Medicare drug price negotiation, Big Pharma was able to extract a major concession: prices wouldn’t be negotiated for new drugs until they had been on the market for 7 years (or in some cases longer).
- Now pharmaceutical companies are maneuvering to delay negotiation even longer.
- Lengthening the negotiation delay period would keep prices higher for longer, costing taxpayers and patients tens of billions of dollars.
Impact of Pharma’s Proposed Delay on Drugs Already Under Negotiation
If the 13-year delay that Big Pharma is pushing was already included in the law, Medicare would have been prohibited from negotiating prices for more than half of the drugs on which the program is negotiating this year, which represent more than $28 billion in annual gross Medicare spending:
| Drug Name | Commonly Treated Conditions Under Medicare Part D | Total Part D Gross Covered Prescription Drug Costs from November 2023-October 2024 | Number of Medicare Part D Enrollees Who Used the Drug from November 2023 – October 2024 | Earliest Year Negotiated Prices Would Be Available If Pharma Delay Proposal Were Current Law |
| Ozempic; Wegovy; Rybelsus | Type 2 diabetes; Type 2 diabetes and cardiovascular disease; Obesity/overweight and cardiovascular disease | $14,426,566,000 | 2,287,000 | 2031 |
| Trelegy Ellipta | Asthma; Chronic obstructive pulmonary disease | $5,138,107,000 | 1,252,000 | 2031 |
| Ofev | Idiopathic pulmonary fibrosis | $1,961,060,000 | 24,000 | 2028 |
| Ibrance | Breast cancer | $1,984,624,000 | 16,000 | 2029 |
| Calquence | Chronic lymphocytic leukemia/small lymphocytic lymphoma; Mantle cell lymphoma | $1,614,250,000 | 15,000 | 2031 |
| Austedo; Austedo XR | Chorea in Huntington’s disease; Tardive dyskinesia | $1,531,855,000 | 26,000 | 2031 |
| Vraylar | Bipolar I disorder; Major depressive disorder; Schizophrenia | $1,085,788,000 | 116,000 | 2029 |
| Otezla | Oral ulcers in Behçet’s Disease; Plaque psoriasis; Psoriatic arthritis | $994,001,000 | 31,000 | 2028 |
Five out of the 10 drugs selected for the first round of negotiations, which have negotiated prices that will become available on January 1, 2026, would have also been excluded if Big Pharma’s 13-year delay proposal were included in current law. Cumulatively, these drugs accounted for more than $37 billion in gross spending by Medicare Part D in 2023:
| Drug Name | Commonly Treated Conditions Under Medicare Part D | Total Part D Gross Covered Prescription Drug Costs, CY 2023 | Number of Medicare Part D Enrollees Who Used the Drug, CY 2023 | Earliest Year Negotiated Prices Would Be Available If Pharma Delay Proposal Were Current Law |
| Eliquis | Prevention and treatment of blood clots | $18,275,108,000 | 3,928,000 | 2027 |
| Jardiance | Diabetes; Heart failure; Chronic kidney disease | $8,840,947,000 | 1,883,000 | 2028 |
| Farxiga | Diabetes; Heart failure; Chronic kidney disease | $4,342,594,000 | 994,000 | 2028 |
| Entresto | Heart failure | $3,430,753,000 | 664,000 | 2029 |
| Imbruvica | Blood cancers | $2,371,858,000 | 17,000 | 2028 |
An overwhelming majority of Americans support Medicare negotiating prices for more drugs, not exempting more drugs from negotiation. Policymakers should reject attempts from Big Pharma and its allies to weaken Medicare drug price negotiation through the Republican reconciliation bill or any other legislation.
Please feel free to reach out to Public Citizen Access to Medicines Advocate, Steven Knievel (sknievel@citizen.org), with any questions or to discuss Medicare drug price negotiation further. For more information, also see Public Citizen’s Issue Brief: Protecting Medicare Drug Price Negotiations.