The Medicare agency will send an initial offer of the maximum fair price to manufacturers with drugs selected in the first cycle of a government drug price program. This development comes amidst ongoing legal challenges against the negotiations.
The Feb. 1 deadline signals the start of the negotiation period for drugmakers and the Centers for Medicare and Medicaid Services in the government’s Medicare Drug Price Negotiation Program. The plan, authorized by the 2022 Inflation Reduction Act, allows the government to set prices on some of the costliest drugs Medicare covers.
Companies will have 30 days to respond to the offer by either accepting it or making a counter offer. President Joe Biden emphasized, “Medicare is no longer taking whatever prices for these drugs that the pharmaceutical companies demand.”
Drugmakers of the first 10 drugs selected for negotiations, including Merck, Johnson & Johnson, and Novartis, entered agreements with the CMS in October 2023. Manufacturers can withdraw from the program at any point but forfeit participation in all other federal health programs such as Medicare and Medicaid. An excise tax is also on the line if companies refuse to participate in the negotiations or comply with the maximum fair price ultimately set by Medicare. Bloomberg Law reached out to all manufacturers with drugs selected in the program. All drugmakers either declined to comment on information regarding Medicare’s initial offer or didn’t respond.
Lawsuits Continue
The initial offers come as drugmakers and industry groups battle the Department of Health and Human Services in court in an effort to block the negotiation process. The US District Court for the District of Delaware on Wednesday heard arguments between AstraZeneca PLC and the US Department of Justice regarding the program’s implementation. The drugmaker alleges the Medicare agency violated the Administrative Procedure Act when it enacted the program through its guidance.
Leading industry group, Pharmaceutical Research and Manufacturers of America, said in a statement the “price-setting process is shrouded in secrecy.” They highlighted the absence of public access to information and criticized the lack of justification for the agency’s decisions.
Executive vice president and chief policy officer for the US Chamber of Commerce, Neil Bradley, emphasized that the exchange between drugmakers and the CMS can’t be called a negotiation when the federal government has the ability to force acceptance of their price or impose an excise tax that can total 1900% of all sales.
The Chamber, in addition to PhRMA, challenged the program. President Biden, in response to CMS submitting price offers, denounced the lobbying efforts against the historic law and criticized the attempt to block Medicare from obtaining the best deal for America’s seniors. He highlighted the opposition from Republicans and their efforts to repeal the legislation to lower drug prices.