Lawsuits expected over Medicare drug price negotiation

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Lawsuits are expected to challenge President Joseph R. Biden's Medicare drug price negotiation.

Prior to the list coming out, the Pharmaceutical Research and Manufacturers of America (PhRMA) put out a statement describing CMS price negotiation as an “arbitrary and politicized process being launched under an extremely compressed timetable.” The statement posted on X, formerly known as Twitter, said that insurance plans can still use prior authorization and step therapy to restrict access.

PhRMA, along with two other groups, filed a lawsuit in June 2023 in the U.S. District Court for the Western District of Texas to block Medicare price negotiation, arguing that price-setting provisions in the Inflation Reduction Act are unconstitutional. Merck, Bristol Myers Squibb, Astellas Pharma and several other drugmakers have filed lawsuits separately seeking to block price negotiation.

Jeff Casberg, RPh, M.S., vice president of clinical pharmacy at IPD Analytics and a member of the Managed Healthcare Executive editorial advisory board, says that he was a “little surprised” that Myrbetriq (mirabegron), a medication for overactive bladder, is not on the list and that could be due to anticipated generic.

Ropes & Gray healthcare partner Margaux Hall, who leads the law firm’s drug pricing and price reporting group, expects further scrutiny of CMS’s authority to negotiate drug prices, as well as new lawsuits filed challenging the negotiation program.

“It is possible that litigants in existing lawsuits may respond to the publication of the drug listing and seek further legal redress,” she says. “Across the broader pharmaceutical industry, I expect to see lots of dissection of this list to try to reverse engineer the agency’s criteria and processes for selection. I also expect follow-on analysis about implications for drugs that may be selected in later years.”

The Centers for Medicare and Medicaid Services (CMS) released the list of the first 10 drugs to be negotiated under the Inflation Reduction Act. The legislation, signed by President Joe R. Biden in August 2022, allows CMS to negotiate prices for drugs covered by Medicare Part D that do not have a generic or biosimilar available.

"The Administration took a significant step today in announcing the first 10 drugs that will be part of its negotiations on Medicare drug pricing,” stated Patrick Cooney, president of The Federal Group. “Legal challenges lay ahead, however, and all eyes will be on their decisions regarding constitutionality of this Inflation Reduction Act policy.”

Included on the negotiation list are:

• Eliquis (apixaban), which prevents blood clots; $16.48 billion in Medicare Part D spending
• Jardiance (empagliflozin), which treats diabetes and heart failure; $7.06 billion
• Xarelto (rivaroxaban), which prevents blood clots and reduces the risk of coronary artery disease; $6.03 billion
• Januvia (sitagliptin), which treats diabetes; $4.09 billion
• Farxigo (dapagliflozin), which treats diabetes, heart disease, chronic kidney disease; $3.27 billion
• Entresto (sacubitril/valsartan), which treats heart failure; $2.88 billion
• Enbrel (etanercept), which treats rheumatoid arthritis, psoriasis and psoriatic arthritis; $2.8 billion
• Imbruvica (ibrutinib) which treats blood cancer; $2.66 billion
• Stelara (ustekinumab), which treats psoriasis, psoriatic arthritis, Crohn’s and ulcerative colitis; $2.64 billion
• Fiasp (insulin aspart), Fiasp FlexTouch, Fiasp PenFill; Novolog (insulin aspart), Novolog FlexPen, NovoLog PenFill, which treat diabetes; $2.58 billion

The 10 drugs in total accounted for $50.5 billion in Part D gross costs, or 20% of prescription drug costs between June 1, 2022, and May 31, 2023. Medicare enrollees taking the 10 drugs paid $3.4 billion in out-of-pocket costs in 2022 for these drugs, according to a press release issued by the U.S. Department of Health and. Human Services.

The drug with the highest spending in Part D is Eliquis (apixaban), which prevents blood clots. Medicare spent $16.48 billion for the 3.7 million people who take Eliquis.

By September 2024, the negotiated prices will be published, and they will go into effect on Jan. 1, 2026. CMS will select for negotiation up to 15 more drugs for 2027, up to 15 more drugs for 2028, and up to 20 more drugs for each year after that.