A contentious negotiation process between the government and the pharmaceutical industry is set to begin. President Joe Biden’s Inflation Reduction Act passed last year giving Medicare the authority to negotiate drug prices with pharmaceutical companies.
If the drugmakers don’t comply, they face a hefty excise tax. It’s Biden’s way to force the hand of what he calls “Big Pharma” to drop drug prices or pay a penalty.
On Tuesday, Aug. 29, ABC news reported a look at the medications that Medicare wants drugmakers to lower the costs of first. The 10 drugs include popular blood thinners Eliquis from Bristol Myers Squibb and Pfizer, and leukemia treatment Imbruvica from AbbVie.
Medicare will work to set new price points for each of these and present an offer to drugmakers in February of 2024. The drugmakers will have until August of 2024 to come to an agreed offer. Then the newly negotiated lower prices would take effect in 2026.
But the drug industry says forcing the companies to lower costs on their products is unconstitutional. Drug companies like Merck and Johnson and Johnson are suing the government in hopes to take the legal fight all the way to the Supreme Court.
“By coercing Merck to provide its drug products at government-set prices, the program takes property for public use without just compensation in violation of the Fifth Amendment,” Robert Josephson, Merck’s executive director of global media relations, said in a statement in June.
The Biden administration argues Big Pharma is just trying to protect big profits.
“They’re suing us to block us from negotiating lower prices so they can pad their profits. We’re going to see this through. We’re going to keep standing up to Big Pharma,” President Biden said in July.
As of now, talks between Medicare and the drugmakers are set to happen with the 10 drugs first on the list — with dozens more in the queue. The Biden administration expects Medicare to save an estimated $98.5 billion over a decade under new prescription pricing.
