This is the small print for the newly #negotiated #drugprices allowed by the #InflationReductionAct. Policy is never just policy. It's regulation, ripple effects, and unintended consequences, as well. Jennifer Snow's read of what will likely happen will help us not be surprised when it does.
Making the connection between health policy, reimbursement and access with actionable insights | Consultant | Medicare, Medicaid, Inflation Reduction Act Expert
In my 20s, today would have been like the Super Bowl for nerdiness. I would have been really excited about the first look at the negotiated rates for the first 10 drugs, effective January 2026. Why is my wonkiness holding back? These drugs are already being negotiated by Medicare prescription drug plans (as well as commercial plans) because they compete with a lot of other drugs. The exception might be Imbruvica because oncology drugs don’t typically do a lot of discount/rebating but I don’t have any inside information on that particular drug. I want to believe in biosimilars. Stelara has a biosimilar coming to market before the January 2026 effective date. Now that biosimilar has to deal with a price set by the government at 66% off. Will there be enough profit left be enough to convince a biosimilar that it is worth entering the market. Unclear. Patient affordability. Next year the point-of-sale price for these drugs will be lower but the plan will face much higher liability so it will impact patients through much higher premiums. A trade-off. In later years the drugs that are going to be negotiated will have much higher list prices so I’m assuming that patients won’t see the benefit of the negotiated price because they will hit the annual out-of-pocket cap either way. Parity is nice but plans tend to win. The Centers for Medicare & Medicaid Services has said that drugs that are negotiated have to be at least at parity with other competitor drugs. Why did they need to say this? Because plans will have a financial preference for high cost, high rebate drugs over those that the government negotiates. The government gets those dollars and plans have a higher percentage liability of the lower amount but no/lower rebates for the negotiated products. So my hunch is that plans will put the competitor drugs at parity to the negotiated drugs, maybe with even the same utilization management written (prior authorization and/or step therapy) but maybe approve the competitor ones at a greater rate. I hope I’m wrong but financial incentives say otherwise. What I think we’ll see is continued horn-tooting celebration of saving that plans were already getting. And for some of these drugs that might be warranted. I’m curious if the plan formularies (released later this Fall) will show any changes based on the negotiated drugs/competitors negotiating or if we have to wait until next year to see the 2026 formularies to see any difference. Overall what I think makes our pharmaceutical system pretty awesome in this country is the innovation that then switches over to generic utilization at more affordable rates than other countries. Are we working on making sure that generics are even MORE affordable and transparent – yes. Thank you Mark Cuban and others. Medicare drug negotiation could work out to be great and, for all the effort, I hope it is worth the trade-offs.