The Inflation Reduction Act (IRA) makes improvements to Medicare to increase accessibility and affordability of prescription drugs for Medicare enrollees, reduce the rate of growth in Medicare drug spending, and improve the financial sustainability of the Medicare program. Over 67.3 million Americans are enrolled in the Medicare program, of whom about 54.1 million are enrolled in the Part D prescription drug program.
Under the IRA, the Secretary of the U.S. Department of Health and Human Services (HHS) has the authority to directly negotiate the prices of certain high expenditure, single source drugs without generic or biosimilar competition with participating drug manufacturers. The IRA requires that drugs selected for negotiation have high total Medicare gross expenditures and meet other criteria defined in the law, including criteria outlined in program guidance issued by the Centers for Medicare & Medicaid Services (CMS), in accordance with the law. On August 29, 2023, CMS published the list of 10 drugs covered under Medicare Part D selected for the first cycle of negotiation. The drugs selected are Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and NovoLog/Fiasp.
In this issue brief, we examine how the maximum fair prices for these drugs negotiated on behalf of people with Medicare compare to historical list prices and average transaction prices across all payers in the U.S. market.
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