President Biden names first drugs targeted for Medicare price negotiation

Updated at 8:32 am EDT

President Joe Biden unveiled the biggest change to Medicare in more than six decades Tuesday as his administration revealed the names of the first ten prescription drugs that will be targeted for direct price negotiation by the U.S. government.

The direct price negotiations for a key plank of President Biden's 202 Inflation Reduction Act, with gave the government permission to barter directly with drug companies in order to lower the price of key medications used by the more than 52 million Medicare members

At present, pharmacy benefit managers that run Medicare prescription plans, such as CVS Health  (CVS) - Get Free Report, Humana  (HUM) - Get Free Report and UnitedHealth  (UNH) - Get Free Report, negotiate rebates from drugmakers they say are used to lower premium costs. 

“For far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs," said Health and Human Services (HHS) Secretary Xavier Becerra.. "But thanks to the landmark Inflation Reduction Act, we are closer to reaching President Biden’s goal of increasing availability and lowering prescription drug costs for all Americans.”  

“Although drug companies are attempting to block Medicare from being able to negotiate for better drug prices, we will not be deterred," Becerra added. "The Biden-Harris Administration will continue working to ensure that Americans with Medicare have access to innovative, life-saving treatments at lower costs.”

HHS said Eliquis, a blood-thinning treatment made by Bristol Myers  (BMY) - Get Free Report that generated $11.8 billion in sales last year, was named as one of the first ten drugs that will be subject to direct negotiation. The list also included Januvia, a diabetes drug made by Merck & Co  (MRK) - Get Free Report and Imbruvica, a leukemia treatment made by AbbVie  (ABBV) - Get Free Report.

Pfizer  (PFE) - Get Free Report and Johnson & Johnson  (JNJ) - Get Free Report treatments will also be affected by the price negotiation changes, but while the names of the drugs that will be targeted will be published today, the actual impact won't take effect until 2026. Officials say the program will say taxpayers $25 billion per year by 2031.

"While some provisions of the Inflation Reduction Act (IRA) are likely to strengthen Part D and address some of the affordability challenges patients face, the law’s price setting provisions threaten access to medicines," the PhRMA lobby group, which is challenging the Biden administration in court, said in a recent blogpost.

"Yes, the IRA took important steps to lower out-of-pocket costs in Part D," the PhRMA said "But the law failed to rein in the insurers and PBMs administering Part D plans who are leaving patients with higher costs and less access to medicines."

President Biden is expected to make a statement at the White House, alongside Vice President Kamala Harris, after the drug pricing target announcement.

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