Why it’s important: Price offers start negotiations.
The drugs selected for negotiations are taken by millions of Americans to treat illnesses like diabetes, cancer and heart disease. The administration identified them in August, beginning a lengthy process intended to result in an agreed-upon price that would take effect in 2026, assuming the negotiating program survives legal challenges.
The first set of price offers is a key 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 conclude by August.
Health policy experts said the announcement of the first round of offers amounted to a kickoff of sorts, giving the Biden administration an opportunity to adopt an aggressive posture and test the will of drug makers to acquiesce.
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 advised the Biden administration on implementing price negotiations. medication.
The administration did not publicly disclose how much it was offering for each drug.
What happens next: The courts still need to intervene.
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 chosen for price negotiations in coming years . The program is expected to save the federal government nearly $100 billion over a decade.
The price negotiation program is a key part of the White House’s efforts to lower everyday costs for Americans, and it’s a policy Mr. Biden can highlight in his campaign for re-election.
“Medicare no longer accepts the prices pharmaceutical companies demand for these drugs,” Mr. Biden said in a statement Thursday.
But the pharmaceutical industry hopes the courts will intervene to end the program, which drugmakers say is unconstitutional. The industry has long argued that allowing the government to negotiate prices would reduce private innovation and discourage companies from developing new drugs.
Lawsuits by drugmakers, the industry’s main trade group and the U.S. Chamber of Commerce are still working their way through the nation’s courts. A federal judge in Delaware heard arguments Wednesday in a case brought by AstraZeneca, the maker of a diabetes drug that was selected for price negotiations.
