Drug prices agreed upon as part of the US Inflation Reduction Act

The Inflation Reduction Act brought into constitution by the Biden administation in 2022, which proposed a drug price negotiation between the government and pharmaceutical companies, has reached it's first agreement. 

The drug price negotiations was set to be part of a deal in the Medicare and Medicaid acts, to improve access to prescription medicine in the country. In the latter part of 2023 the first 10 medications set to undergo negotiations was released by the federal health insurance provider. 

The prescription drugs on the list included those from some of the biggest drug makers in the USA, with a definite tendency towards medications for chronic diseases, such as Boehringer Ingelheim’s diabetes medication, Jardiance (empagliflozin). 

The months of negotiations have been ongoing between the US government and the pharmaceutical companies, who initially resisted the proposition to cap drug prices. Each company has now reached an agreement through various levels of negotiation. Five companies negotiated prices with the Centres for Medicare and Medicaid Services (CMS), rebuffing the initial offers from CMS but CMS then accepting the drugmakers’ counter offers. Five other companies eventually accepted the CMS’ final written offers, before the deadline. 

The agreed prices

The settled upon list prices show a reduction from 2023 to the new prices set to come into effect in 2026, of 38–79%. The Biden Administration announced the projected savings to the taxpayer to be US$6 billion in 2026 and mean savings of US$1.5 billion for patients. 

Over the past year many concerns have been voiced from the pharma industry about the price caps, with the potential affects on investment and innovation in the field. Several of the selected pharma companies even filed lawsuits against the US government, claiming that the Act was unconstitutional. The cases were all rejected by the Federal court, but have been appealed by the pharma companies. 

There has already been some demonstration of investors in the form of venture capitals choosing to invest in later stages of research, rather than in more novel lines of work, which could have implications on drug development down the line. Research programmes from companies are also being modified due to the changes induced by the Act. 

However, with the mammoth savings for patients that are predicted, this should mean that these more widely used chronic disease drugs will be available to more patients, for longer. 

Medicare is already begun the planning for the next stage of negotiations, with 15 drugs this time coming under target for 2027. 

To see more about the affects of the negotiations, read this article.

Source: Pharmaceutical Technology. US government unveils finalised drug prices under Inflation Reduction Act. [Date accessed 24/08/2024] www.pharmaceutical-technology.com/newsletters/us-government-unveils-finalised-drug-prices-under-inflation-reduction-act/