Medicare Quietly Gifted AbbVie’s Blockbuster Drug Seven Extra Years Before Price Negotiations
WASHINGTON, D.C. — A little-known change to Medicare drug price negotiation rules may cost taxpayers billions of dollars and generate a windfall for AbbVie by excluding its pancreatic insufficiency drug Creon from negotiation for an extra seven years, according to a Public Citizen investigative report released today. The Centers for Medicare and Medicaid Services (CMS) never justified the change, which has not previously been analyzed. The Trump administration now has proposed making the change permanent in a new rule.
More than 185,000 Medicare beneficiaries used Creon in 2024, costing Medicare $1.49 billion in gross spending. The drug chosen for negotiation instead of Creon accounted for about half a billion less in Medicare spending over the same period. Medicare was entitled to much larger mandatory discounts on Creon than the alternative medication.
The Inflation Reduction Act of 2022 gave small molecule drugs seven years and biological medicines 11 years on the market before they are eligible to be selected for the Medicare drug price negotiation program. In 2024-25, between the first and second year of the negotiation program, CMS decided that certain biologic drugs originally approved as small molecules but later converted by FDA to be regulated as biologics as of March 23, 2020, could use their conversion or biologic “deeming” date for the purposes of identifying whether 11 years had elapsed, rather than their initial earlier date of first approval by FDA.
“The Trump administration wants to make permanent a costly Medicare mistake, which creates windfalls for AbbVie and other drug corporations by excluding some expensive biologic drugs from negotiations for years,” said Peter Maybarduk, Access to Medicines director for Public Citizen. “Medicare price negotiation already is far too generous to drugmakers, which gouge Americans for many years before negotiated prices kick in.”
“The Trump administration must not continue this harmful policy that gives some old drugs an unfair delay from price negotiations,” said Sarah Karlin-Smith, Access to Medicines research director for Public Citizen. “Congress required the FDA to convert these old drugs to biologics so that cheaper alternatives to them could be produced, reducing government costs, not so that industry could evade price negotiations for longer.”