Why it matters: The price offers provide the impetus for negotiations.
The drugs chosen for negotiations are taken by millions of Americans to treat diseases such as diabetes, cancer and heart disease. The administration identified them in August and began a lengthy process that would result in an agreed price that would take effect in 2026 if the negotiation program survives legal challenges.
The first round of price offers is an important step in the negotiation process. Each drugmaker has until early March to accept the offer or propose a counteroffer to the government. A series of negotiating sessions could follow, with the process expected to be completed by August.
Health policy experts said the announcement of the first round of offers was a starting point, giving the Biden administration a chance to take an aggressive stance and test drugmakers’ willingness to comply.
The proposals help “set the tone for the rest of this back-and-forth,” said Andrew W. Mulcahy, a health economist at the RAND Corporation who has advised the Biden administration on its implementation of drug price negotiations.
The administration did not publicly disclose how much it was offering for each drug.
What happens next: The courts still have to weigh in.
The price negotiation program was created by the Inflation Reduction Act, the climate, tax and health care package that President Biden signed into law in 2022. Additional drugs will be selected for price negotiations in the coming years. The program is expected to save the federal government nearly $100 billion over a decade.
The price negotiation program is a central part of the White House’s efforts to reduce everyday costs for Americans, and it is a policy that Mr. Biden can point to as he campaigns for re-election.
“Medicare will no longer accept the prices for these drugs that pharmaceutical companies charge,” Mr. Biden said in a statement on Thursday.
But the pharmaceutical industry is hoping the courts will step in and strike down the program, which drugmakers say is unconstitutional. The industry has long argued that allowing the government to negotiate prices limits private innovation and discourages companies from developing new drugs.
Lawsuits from drugmakers, the industry’s main trade group and the U.S. Chamber of Commerce continue to play out in courts across the country. A federal judge in Delaware heard arguments Wednesday in a case involving AstraZeneca, the maker of a diabetes drug that was singled out for price negotiations.
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2024-02-01 17:17:39
www.nytimes.com
