Biden-Harris Administration Receives Counteroffers from Drug Companies as Part of Ongoing Negotiations to Lower Drug Prices

The U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), announced that all manufacturers participating in the first cycle of Medicare drug price negotiations have responded with counteroffers. This news comes after HHS sent initial offers on February 1, as the agency was empowered to do by President Biden’s lower cost prescription drug law, the Inflation Reduction Act. This law is a cornerstone of the Biden-Harris Administration’s efforts to lower prescription drug costs.

“We are committed to constructive dialogue and are glad the drug companies are coming to the table,” said HHS Secretary Xavier Becerra. “These are good-faith, up front negotiations.  The Biden-Harris Administration is working to lower costs for families and keep money in the pockets of millions of Americans instead of Big Pharma.”

“CMS is dedicated to improving access to some of the most expensive drugs for people with Medicare while encouraging market competition and fostering innovation through this first of its kind negotiation process,” said CMS Administrator Chiquita Brooks-LaSure. “Receiving counteroffers marks another negotiation milestone met in the continued implementation of the landmark Inflation Reduction Act, which is already lowering drug prices for people with Medicare.”

Negotiations will continue over the next several months. If HHS and a participating manufacturer agree on a maximum fair price by the end of the negotiation period, those new negotiated prices will be published by September 1, 2024, and take effect beginning in 2026.

The Inflation Reduction Act’s suite of provisions aimed at lowering prescription drug and health care costs are already helping to lower costs. The law expanded eligibility for full benefits under the Low-Income Subsidy program (LIS or “Extra Help”) under Medicare Part D at the beginning of this year. Nearly 300,000 people with low and modest incomes currently enrolled are now benefiting from the program’s expansion. A comprehensive public education campaign is underway to reach the more than three million people who are likely eligible for the program but not yet enrolled. In addition, as of January 1, 2024, some people enrolled in Medicare Part D who have very high drug costs will, for the first time, have their out-of-pocket costs capped at about $3,500. In 2025, all people with Medicare Part D will benefit from a $2,000 cap on out-of-pocket prescription drug costs.

Also today, HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a fact sheet detailing the projected impact of the Inflation Reduction Act on lowering drug costs for the more than eight million Medicare Part D enrollees who live in rural areas. Highlights from the research include:

• About 281,000 rural enrollees would have benefited from the IRA’s $35 cap on cost-sharing for each Medicare-covered insulin product had it been in effect in 2020.
• About 481,000 rural enrollees would not have had any out-of-pocket costs for recommended Part D covered adult vaccines had this part of the law been in place in 2021. 
• About 289,000 rural enrollees are projected to save $1,000 or more in 2025 thanks to the Inflation Reduction Act’s new caps on out-of-pocket costs and other drug related provisions. 

ASPE also found that:

• About 20 percent of Medicare enrollees using NovoLog/Fiasp (insulin), reside in rural areas, which is a higher proportion compared to the Medicare Part D population.
• Rural Medicare enrollees have disproportionately higher rates of certain health conditions relative to their urban peers, including higher rates of heart disease, stroke, cancer, and chronic lower respiratory disease. They also report greater health care costs and difficulty affording prescription drugs.
• People living in rural communities enrolled in the Extra Help program will save about an average of $300 annually thanks to the Inflation Reduction Act.

The recently launched website LowerDrugCosts.gov is a resource to help people with Medicare understand how the Inflation Reduction Act may help lower their out-of-pocket drug costs. As part of that effort, today, HHS added 50 state-by-state infographics plus DC and Puerto Rico that are accessible on LowerDrugCosts.gov by clicking on the interactive map. These new, plain language infographics are meant to assist with continuing education and outreach on the new benefits made available through the Inflation Reduction Act.

The ASPE fact sheet covering rural health is available at: https://aspe.hhs.gov/reports/ira-research-series-projected-impacts-rural-medicare-enrollees

CMS outreach postcards on the Extra Help program are available at: https://www.medicare.gov/publications/search?field_publication_category_value=All&field_publication_language_value=All&keywords=12200