Americans Pay the Most for Drugs Selected for Medicare Price Negotiation

In February 2024, the Centers for Medicare and Medicaid Services (CMS) will begin negotiations for the first 10 drugs selected under the 2022 Inflation Reduction Act (IRA). A new study finds that the list prices for the 10 selected drugs are about three times higher in the United States than in other countries. Even after rebates and discounts, prices are higher than other countries, with the exception of Janssen’s Xarelto (rivaroxaban), according to recently released paper from the Commonwealth Fund. They found that Switzerland has the second-highest prices for most of the 10 drugs.

Researchers — led by Evan D. Gumas, research associate, international health policy and practice innovations — conducted the analysis with data from IQVIA and information from the Medicare Payment Advisory Commission (MedPAC), an independent congressional agency. They compared U.S. prices with those in Australia, Canada, France, Germany, Japan, the United Kingdom and Switzerland. They used the Laspeyres price index, which is used to measure the price of a basket of goods or services in a given period. In this case, it represents the 2021 retail prices of the 10 drugs chosen by CMS for price negotiation.

Understanding the differences in global pricing is important for benchmarking, researchers said. “We often hear how drug prices are substantially lower in other countries, but actually being able to see estimates of how much these prices vary between countries is important, particularly at the individual drug level for these 10 drugs,” Gumas told Managed Healthcare Executive. “As for U.S. decision makers, understanding drug pricing and policy in countries where drug use is similar but costs are lower is important for benchmarking affordability going into the negotiation process and can hopefully serve as a reference point for policymakers.”

The drugs selected by CMS for price negotiation accounted for $50.5 billion in total Part D prescription drug costs between June 1, 2022, and May 31, 2023. Medicare beneficiaries paid $3.4 billion in out-of-pocket costs for these drugs. (See below for list of the 10 drugs.)

Eliquis, Jardiance and Xarelto top the list for drugs with the highest Medicare spending. Between June 1, 2022, and May 31, 2023, Medicare’s Part D spending on Eliquis was $16.48 billion; Medicare spent $7.08 billion for Jardiance and $6.03 billion for Xarelto. Eliquis (apixaban) and Xarelto (rivaroxaban) both treat patients with atrial fibrillation, a common type of irregular heartbeat. Jardiance (empagliflozin) is used to treat patients with diabetes, heart failure and chronic kidney disease.

In 2022, about 7.7 million Medicare enrollees used one or more of the 10 drugs selected, which represents about 15% of all Medicare Part D enrollees, according to a recent research report from the Office of the Assistant Secretary for Planning and Evaluation (ASPE), which is part of the U.S. Department of Health and Human Services. Spending on these 10 drugs grew more than three times as fast as the rate of growth in total spending on all Part D drugs.

The ASPE report also notes that seven of the 10 selected drugs received an R&D tax credit from the U.S. federal government. One of those drugs also has a “government interest” patent, which means the U.S. government contributed support. The report identified Merck’s Januvia (sitagliptin), which treats patients with diabetes, as the product with three patents with a government interest, which focus on the treatment of diabetes with DPP-4 inhibitors. Januvia was the first of this class to be approved by the FDA.

Going forward, the CMS plans to send to each manufacturer a proposal for a maximum fair price and justification by Feb. 1, 2024. CMS has said that it will consider evidence related to therapeutic alternatives as well as costs of research and development, and production and distribution. Manufacturers have 30 days to respond. CMS will meet with each company up to three times for negotiation sessions during the spring and summer of 2024.

First 10 Drugs Chosen for CMS Medicare Part D Negotiation

• Eliquis (apixaban), which prevents blood clots and stroke
• Jardiance (empagliflozin), which treats diabetes, heart failure and chronic kidney disease
• Xarelto (rivaroxaban), which prevents blood clots and stroke
• Januvia (sitagliptin), which treats diabetes
• Farxiga (dapagliflozin), which treats diabetes, heart failure, chronic kidney disease
• Entresto (sacubitril/valsartan), which treats heart failure
• Enbrel (etanercept), which treats rheumatoid arthritis, psoriatic arthritis, plaque psoriasis, ankylosing spondylitis
• Imbruvica (ibrutinib), which treats chronic lymphocytic leukemia/small lymphocytic lymphoma
• Stelara (ustekinumab), which treats Crohn’s disease, plaque psoriasis, psoriatic arthritis
• Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill (insulin aspart), which treat diabetes