President Trump issued an executive order aimed at revamping a law that allows Medicare to negotiate prescription drug prices, potentially leading to lower costs for millions of Americans. The order directs the Department of Health and Human Services (HHS) to collaborate with Congress on changes to the law, which has been a major priority for the pharmaceutical industry.
Pharmaceutical Industry Lobbying
The pharmaceutical industry has long lobbied for changes to the law, arguing that it would allow them to negotiate prices directly with Medicare without competition from other manufacturers. However, this change cannot be implemented by drug makers themselves since negotiation is included in legislation.
Key Areas of Change
Drug makers have been working behind the scenes in Washington D.C. and Capitol Hill to:
- Delay eligibility timelines for price negotiations.
- Make it harder for government agencies such as HHS and CMS to negotiate prices directly with manufacturers.
One significant area of focus has been delaying eligibility timelines. For instance, they have sought to extend by four years the 13-year wait until more complex biotech drugs are eligible for Medicare price negotiations. These drugs typically include medications delivered via injection or infusion into patients’ veins or muscles, such as:
- AbbVie’s Humira (rheumatoid arthritis treatment)
- Amgen’s Enbrel (rheumatoid arthritis treatment)
- Janssen Pharmaceutical’s Xarelto (blood clot prevention)
- Johnson & Johnson’s Xarelto
Additionally, they have pushed lawmakers to block outright negotiation authority over small-molecule drugs, which comprise most medications.
Current Law and Negotiation Authority
Under current law, government agencies can negotiate prices directly with manufacturers after certain periods of time without competition:
- Capsules and pills: 9 years on the market
- Injection or infusion drugs: 13 years on the market
Expected Changes and Savings
White House officials indicate that other changes will yield more savings than those attained during Biden’s first round under this new authority. While specific changes were not detailed, officials suggested that there could be additional rounds of negotiations beyond just two rounds under Biden’s administration.
Comparison with Biden’s Administration
In contrast to Biden’s efforts, which resulted in price cuts of up to 79% for the first ten most expensive drugs added to Medicare program lists through negotiations, President Trump’s administration plans to negotiate prices for an additional 15 medications, including:
- Novo Nordisk’s Ozempic (diabetes treatment)
- Wegovy (diabetes treatment from Novo Nordisk)
- Janssen Pharmaceutical’s Xarelto (blood clot prevention)
- Pfizer Inc.’s Ibrance (cancer drug)
- Xtandi (cancer drug from Pfizer Inc.)
- AstraZeneca Plc’s Tagrisso (lung cancer medication)
- AbbVie Inc.’s Skyrizi (psoriasis medication)
- Gilead Sciences Inc.’s Truvada (HIV prevention pill)
- Merck & Co.’s Keytruda (skin cancer medication)
- Eli Lilly & Co.’s Verzenio (breast cancer medication)
- Eli Lilly & Co.’s Taltz (psoriasis medication)
The list also includes other medications from major pharmaceutical companies like Novo Nordisk (Ozempic), Gilead Sciences (Truvada), AstraZeneca (Tagrisso), and AbbVie (Skyrizi).
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