Pharmaceutical companies agree to engage with CMS in Medicare drug price negotiation process

Despite filing lawsuits challenging the drug price negotiation provisions of the Inflation Reduction Act, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb and Merck have reportedly accepted they will have to start the negotiations with the US government. 

October 1, 2023, sees a significant milestone in the Medicare Drug Price Negotiation Program, with pharmaceutical companies of those drugs subject to price negotiations under the Inflation Reduction Act (IRA) required to inform Centers for Medicare & Medicaid Services (CMS) they will sign agreements to participate in pricing discussions. As reported by several news outlets, including CNBC and Bloomberg Law, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb and Merck have all indicated they will participate in the pricing negotiation process with CMS. With drugs included in CMS’ list of first 10 drugs selected for pricing negotiation and faced with the prospect of high fines and taxes, or their products no longer being available via the Medicare and Medicaid programs, it seems the companies had little choice but to agree to take part. As of writing, the position of the other pharmaceutical companies with drugs subject to the first round of pricing negotiations is not known.  

UPDATE October 3, 2023: As announced by CMS in their press release, all 10 pharmaceutical companies have now agreed to participate in Medicare drug price negotiation, with CMS Administrator Chiquita Brooks-LaSure noting: 

“Our goal is to ensure access to innovative treatments and therapies for people that need them when they need them. Medicare will negotiate in good faith consistent with the requirements of the law on behalf of people with Medicare.”

Signed into law in August 2022 by the Biden–Harris Administration, the Inflation Reduction Act aims to lower healthcare costs and prescription drug prices for millions of Medicare beneficiaries across the US. Despite 80% of Americans supporting the Medicare Drug Price Negotiation Program, it has also come under much scrutiny. There has been a flurry of activity from the pharmaceutical industry over the past few months, with several companies, including AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb and Merck, as well as industry representatives, filing lawsuits challenging the program’s legality. They also argue that the program will discourage investment in new drug research and development, and impact patients by leading to higher costs and delayed access to treatments. The US government and patient groups, on the other hand, dismiss these claims and have fought back against these lawsuits.  

The timeline for pharmaceutical companies will now move quite swiftly. By October 2, 2023, pharmaceutical companies are statutorily obliged to submit data to CMS that will be considered by the agency to develop an initial offer of a maximum fair price for each selected drug. Members of the public can also by this date submit data proposing alternatives to those selected drugs. Later in 2023, CMS will participate in meetings with pharmaceutical companies to discuss their data submitted as well as carry out ‘patient-focused listening sessions’ to gauge the input of other stakeholders. Following the initial offer of the maximum fair price on February 1, 2024, on September 1, 2024, CMS will publish the final negotiated prices that will come into effect from 2026.