Medicare: These medications could be subject to price controls

As part of the Inflation Reduction Act, Medicare will directly set the prices of covered prescription drugs for the first time in history. Some drug manufactures have already hinted at some drugs that will fall into this category.

In September, the Centers for Medicare & Medicaid Services (CMS) plans to publish the list of the first 10 drugs covered by Medicare, a federal health insurance program mainly for people 65 or older, that are subject to price controls.

This is the first time the federal government will control prices directly with manufacturers for lower prices on selected covered high-expenditure drugs. Those controls wouldn’t take effect until 2026. While the Inflation Reduction Act refers to “negotiation,” the text of the legislation allows the CMS to set a “maximum fair price” for a drug. The pharmacuetical company then must “enter into agreement” for the price. If they do not, the government will assess a daily excise tax on every drug sold over the “maximum fair price.”

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CMS Administrator Chiquita Brooks-LaSure previously said in a statement that the Inflation Reduction Act and Medicare drug price controls will allow the agency “to better protect the health of people with Medicare by ensuring they can afford the prescription drugs they need.”

As part of the Inflation Reduction Act, Medicare will directly set the prices of covered prescription drugs for the first time in history. (Mike Mergen/Bloomberg via Getty Images/File / Getty Images)

By contrast, some drug companies have expressed their disdain for the plan to set Medicare drug prices and even sued the federal government over the program, calling it a sham.

The list of the 10 drugs won’t be made public until Sept. 1. However, some companies disclosed which drugs will be part of the first round of negotiations in court filings.

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Merck – which calls the “Drug Price Negotiation Program” a sham – said its type 2 diabetes treatment Januvia is expected to be subject to negotiations this year, according to court documents. The drug is “among the ten most widely reimbursed drugs within Medicare Part D,” according to the company. 

In September, the Centers for Medicare & Medicaid Services plans to publish the list of the first 10 drugs covered by Medicare. (Jeffrey Greenberg/Education Images/Universal Images Group via Getty Images/File / Getty Images)

Meanwhile, Johnson & Johnson’s Janssen Pharmaceuticals, which also disagrees with the program, said its medication Xarelto will be among those with a controlled price. The drug is used to treat blood clots and reduces the risk of stroke.

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In another court filing, global biopharmaceutical company Bristol Myers Squibb (BMS) said that Eliquis, which is used to prevent blood clots and strokes, will also be subject to price controls.

Another one of its drugs, Opdivo, which is used to treat certain types of cancer, will be chosen for a subsequent round of controls, according to BMS.