The Department of Health and Human Services announced the first list of Medicare Part D drugs subject to price negotiations, a tenet of the Inflation Reduction Act designed to reduce health care costs. HHS said the selected drugs accounted for $50.5 billion in total Part D gross covered prescription drug costs, or about 20%, of total Part D gross covered prescription drug costs between June 1, 2022, and May 31, 2023.
Drugmakers will need to sign agreements to join negotiations by Oct. 1, with the Center for Medicare & Medicaid Services making initial price offers in February 2024. The drugmakers will then have a month to accept or make a counteroffer. The resulting agreed-upon negotiated prices for the 10 drugs will be published by CMS by Sept. 1, 2024, with the prices taking effect Jan. 1, 2026. Additional drugs could be added to the list in future years.
Drugmakers that decline to negotiate the prices of selected drugs with CMS will be required to either pay an excise tax of up to 95% of U.S. sales or pull all its products from the Medicare and Medicaid markets.