The first 10 drugs to be targeted for major drug price negotiation by the Centers for Medicare and Medicaid Services (CMS) Under the Inflation Reduction Act of 2022 have been announced. Reductions will go into effect next year. All are brand name drugs that do not have a generic alternative. In 2027, negotiated prices will go into effect for 15 more drugs, followed by another 15 drugs in 2028 and 20 more in each subsequent year. 

Drugmakers will have 30 days to sign an agreement to participate in the negotiations, or else face large tax penalties unless they choose to opt out of the Medicare program market entirely. Medicare has 65 million people enrolled in the U.S.

Together, these first 10 drugs represent $50.50 billion, or 20% of the total drug cost for Medicare Part D spending over the past year. In total, Medicare recipients spent $3.4 billion out-of-pocket for these drugs in 2022, with average out-of-pocket spending for the most expensive drugs of $6,497 per person. The rest of the cost was borne by U.S. taxpayers. 

CMS has long been dictating prices to physicians and hospitals, but until the Inflation Reduction Act of 2022, CMS had previously been prohibited from negotiating drug prices on behalf of American taxpayers and seniors enrolled in Medicare, the way most other developed countries have been doing for decades. 

This first round of 10 drugs that will be subject to negotiated prices are: 

• Eliquis, a blood thinner 
• Xarelto, a blood thinner 
• Januvia, a diabetes drug 
• Jardiance, a diabetes drug 
• Enbrel, a rheumatoid arthritis drug 
• Imbruvica, a drug for blood cancers
• Farxiga, a drug for diabetes, heart failure and chronic kidney disease 
• Entresto, a heart failure drug
• Stelara, a drug for psoriasis and Crohn's disease 
• Fiasp and NovoLog, for diabetes

Medicare Part D drugs are taken at home, as opposed to medications covered under Part B, which are administered by providers in facilities, such as infusion drugs.  

The ability to reduce prices will reduced out-of-pocket costs for enrolled seniors. It will save even more money for U.S. taxpayers. A study published in JAMA Health Forum in January, 2023 found that allowing Medicare to negotiate drug prices will likely save the U.S. billions of dollars.

"While pharmaceutical companies made record profits and spent hundreds of millions of dollars year after year, millions of Americans were forced to choose between paying for medications they needed to live or paying for basic necessities," said Christen Linke Young of the Brookings Institute, and Deputy Assistant to the President for Health and Veteran Affairs. 

"When asked whether it planned to negotiate with CMS, a spokesperson for Bristol Myers Squibb, the maker of Eliquis, said, 'We have no choice. If we did not sign, we'd be required to pay impossibly high penalties unless we withdraw all of our medicines from Medicare and Medicaid. That is not a real choice[.]"  

AstraZeneca, Johnson & Johnson, PhRMA, Merck, and Bristol Myers Squibb are among other major drug makers and trade associations that have filed 8 separate lawsuits against the Inflation Reduction Act of 2022. They claim having to negotiate drug prices in the marketplace will cause them to reduce investment in research and development, leading to fewer breakthroughs for new drugs. 

But after insulin was capped at $35 per month, and overwhelmingly positive reactions from consumers and taxpayers, there is broad support for more price caps. 

"Some of these drugs can be a lifeline for people with serious conditions, but only if they can afford to fill their prescriptions," said Tricia Neuman, a Medicare expert with KFF," also known as the Kaiser Family Foundation.

Stacie Dusetzina, a health policy professor at Vanderbilt University in Nashville, Tennessee, said patients who don't yet see their prescription drugs on this first list should not be discouraged. Medicare is not finished announcing drugs they will negotiate. Also, Medicare has said  in the mean time, it will funnel the savings, expected to be massive, into reducing the cost of other Medicare benefits, like  premium increases and caps on out-of-pocket expenses. 

That is, if the drug makers are not successful in their lawsuits. Lawrence Gostin, director of the O'Neill Institute for National and Global Health Law at Georgetown University, said, "I think the claims that they are making are without merit. But I think the pharmaceutical industry are going to pay whatever it takes in lobbying, paying legal bills and legal challenges that they can to save their most valuable products."