As prescription costs soar, drugmakers agree to Biden’s negotiation plan — for now

Uncle Sam’s ultimatum… Several pharma companies (reluctantly) agreed last week to participate in the Biden admin’s Medicare price negotiation program. It would let Medicare negotiate discounts of up to 60% on numerous drugs. FYI: 65M Americans, most age 65+, are Medicare-enrolled. Ten initial blockbuster drugs (like diabetes and heart meds) have been chosen from the likes of Merck, Bristol-Myers Squibb, Johnson & Johnson, and Novo Nordisk. 

• Refresher: In June, Merck and Bristol-Myers sued the gov’t, arguing the Medicare policy is unconstitutional and could hurt research and revenues from top drugs (some make up a quarter of their annual sales). They’re not dropping the suits. 

• If companies fail to comply, they’ll be forced to pay a penalty of up to 95% of their drug’s US revenue or remove all their drugs from Medicare (the largest buyer of prescription drugs). Drugmakers say they had no real choice. 

Rx anxiety… Americans spend more on prescription drugs than anyone else in the world, partly because the US doesn’t directly regulate prices. 60% of adults take at least one prescription med, and while most costs are covered by private insurers or Medicare, nearly 28M Americans didn’t have insurance last year. And 9M adults said they skipped or delayed drug doses because of the cost (some drugs 6X’d in price last year). Medicare’s negotiations could save participants $800/year, on average, and save taxpayers $102B through 2031. 

• Still: The new prices aren’t expected to take effect till 2026, and drugmakers are likely to keep fighting (maybe even taking it to SCOTUS).