When Congress added a prescription drug benefit to Medicare nearly two decades ago, the bill explicitly prohibited the program from negotiating with pharmaceutical companies for the prices of the life-sustaining drugs that millions of enrollees take every day. AARP has made the argument for many years that with more than 50 million Americans getting their medications through Medicare, if the program was allowed to negotiate prices, the power of those numbers would yield a much better deal for Medicare beneficiaries and for taxpayers, who ultimately foot the bill for the lion’s share of the medication costs.
“When we talk about the Inflation Reduction Act of 2022, the core component is the Medicare negotiation,” says Bill Sweeney, AARP senior vice president for government affairs. “That is the long-term solution to the problem that we’ve been seeing for decades, which is out-of-control prescription drug prices.”
ABCs of price negotiations
To start, the U.S. Department of Health and Human Services (HHS) will identify the 100 medicines that Medicare spends the most on and then decide which qualify to be in the first group of 10 drugs whose prices will be negotiated. Those qualifications are:
- The drugs can’t have any direct competitors. That means there is no generic equivalent, and if it’s a biologic drug, there can’t be a biosimilar product. A biologic drug is a complex medication typically used to treat cancers and other serious illnesses.
- The medications must have been on the U.S. Food and Drug Administration’s approved list for many years. That threshold is nine years for what are called small molecule drugs — medicines you typically get at the pharmacy and take in pill form. Biologics must have been approved for 11 years to be eligible for negotiation.
These two rules are the reason why some of the costliest drugs may not be among the first to have their price negotiated.
Here’s a look at some of the medications that as of now could qualify for the first batch: