Florida has more people on Medicare than any other state except one. Almost one in four people who call Florida home rely on the federal government health insurance plan.
Thanks to the Inflation Reduction Act, Medicare will now be able to bargain over prices for the first 10 drugs covered by the plan. Those drugs include Entresto for heart failure, Enbrel for arthritis, Eliquis and Xarelto to help prevent blood clots, and Jardiance, Januvia, and Farxiga for Type 2 diabetes.
The first price offers from the makers of the 10 drugs are due to the federal government in less than a month. The negotiated prices will be effective in 2026.
Dr. Meena Seshamani and Brian Brito discussed the price negotiations Friday with Tom Hudson on The Florida Roundup.
Seshamani is the director for the Center for Medicare. She said the goal of the negotiations is to ensure those on Medicare get a fair price for their medications.
Brito is the vice president of pharmacy at CareMax, which carries Medicare Advantage plans. Also known as Medicare Part C, these are insurance plans from Medicare-approved private companies. Brito said the negotiations could lead to lower insurance premiums for Medicare Advantage patients in Florida.
Some of the comments have been edited for length and clarity.
What is the goal of negotiating the price of these drugs?
Seshamani: The goal of negotiating the price of some of the highest cost and commonly used drugs by people in Medicare is so that we can get a fair price for the people who rely on these medications for their health and livelihood, and for the Medicare program and the American taxpayer.
Is one of the goals an actual drop in that price compared to what Medicare and patients are paying today, or slowing down price increases?
Seshamani: Absolutely being able to negotiate is going to improve the sustainability of the program so that we can make sure that we are paying commensurate to how these drugs impact the lives of patients. You know, one of the key pieces in negotiating is looking at the clinical benefit that these drugs provide to people and being able to see what that means in the real world. As you and your listeners may know, a lot of times drugs are evaluated in these kind of controlled settings.
Now, these are drugs that have been out there for at least seven years or 11 years where we can see how it works when they’re in communities, right? Where we can see, for example, is a drug easy for somebody to take so they’re more likely to be able to take it, that it’s keeping them at home rather than, you know, ending up in a hospital or a nursing home. And being able to consider all of those factors as well in looking at how drugs actually improve the health of people and being able to reward that with fair pricing.
So how will Medicare assess offers that will come in from drug makers? Those offers are due by Oct. 2.
Seshamani: As laid out in the law and in subsequent guidance that we put out, as you mentioned, Oct. 2, that is the date that we will get data from manufacturers and also from the general public on how these drugs work, what’s the cost of producing them. You know, things like that.
Just let me interrupt for one moment. How they work is not a mystery, right? I mean, these drugs, as you mentioned, have been out in the market at least seven years or 11 years. Their efficacy is not debatable at this point. It’s really more about the cost to manufacture, the cost to distribute, cost to deliver. And then, you know, what the pharmaceutical companies presume would be a fair margin, a fair profit margin.
Seshamani: You’re raising a good point that I should clarify. When I said how they work, how do they benefit people in relation to what might be an alternative that somebody could take? So that’s one of the things that we’re looking at. We want to identify, okay, there is this drug that’s being negotiated. What are other options that are available to people and how does this drug compare with those so that we can see what could be a fair price for this?
And the comparison is on a medical side as opposed to an economic side, or both?
Seshamani: Correct, the therapeutic alternative. And with that, Tom, it’s also possible that there is not an alternative, right? Like one of the things that we also want to look at, is this drug addressing a currently unmet clinical need? Is this drug addressing issues for specific populations, right?
So that we can make sure that we’re looking at how are these drugs really improving health and well-being for people, and having that be a cornerstone as we then, and also incorporate, like you mentioned, information around cost of production and distribution and all of those things, to come up with an initial offer that then engages us in a back and forth negotiation process with manufacturers.
The negotiated price, assuming that there is an agreement at the end of the negotiation process, would take effect beginning in 2025. When, Doctor, do you think that Medicare enrollees would see an impact in their pocketbooks?
Seshamani: I want to emphasize something you said, if an agreement is reached. Because this is a voluntary process, right? On Oct. 1, manufacturers have a decision. They have to decide if they want to sign an agreement to enter into a negotiation process with us. And it is a negotiation process where, you know, you can reach an agreement.
How will any of the savings that may be realized in a successful negotiation be passed along to Medicare patients?
Seshamani: Ultimately, this is enabling us to get a fair price for everyone, where we are driving the conversation about what it is that matters to people in the drugs that they take for their health.
And so being able to drive the price conversation in that way, along with all of the other provisions in the Inflation Reduction Act, like the $2,000 out-of-pocket cap that’s going to go into effect in 2025, getting vaccines at no cost sharing, you know, insulin having a $35 cap on a month’s supply that people will pay. All of that together is really game changing and life changing for people in the Medicare program.
Doctor, thanks so much for your time today. Much appreciated.
Seshamani: Thank you again for having me.
Brian, welcome to the program. Thanks for your time. Does CareMax support these Medicare price negotiations for prescription drugs?
Brito: Absolutely. We’re thrilled. We think this is a landmark undertaking by the administration, and we’re excited that it’s going to have a positive impact on our members and ultimately in health care in general here in the United States.
And there are 10 drugs on this first list. Each year that’s likely to grow, I think then 15 drugs and continues in the years in advance. What could be the impact, though, of a negotiated maximum fair price, is what the law calls, a maximum fair price for these first 10 drugs that have been identified as targets in the negotiations?
Brito: Well, I think the first part is creating some transparency. You know, a lot of these products, there’s no visibility into what the actual cost is to the health plan because there’s these rebates that have been kind of kept confidential and close to the vest for a lot of time.
So once the price is negotiated, Medicare will have a pretty clear understanding of what the price is actually going to be at the end of the day in the health plan. For members, obviously there’s a reduction in the overall spend, which should, you know, lead to lower premiums, lower co-pays, potentially. Some of these medications may even be lowered to the point where they fall out of what’s called the specialty medication tier and fall into more of a brand name, typical co-pay tier. And they can, you know, members wouldn’t go away from co-insurance or deductibles for those products.
So I think there’s quite a few benefits to negotiating these prices, but primarily focused around sharing transparency and then moving some of those savings to other areas, you know, particularly premiums and taxpayers.
Do you really think that this negotiation over prescription drugs, 10 of them, could lead to lower insurance premiums for Medicare Advantage patients in Florida?
Brito: I do. I mean, you know, those 10 drugs accounted for close to $50 billion last year.
Do you think it increases the volume then, the demand side for these medicines? If price cuts are actually realized.
Brito: The organic demand will remain the same, I think. Maybe, perhaps, the utilization may go up. But I think ultimately that’s what we want, right? The adherence of members taking these medications is what we want, right? That’s the key component in in treatment, any treatment plan. You know, and then with a reduced cost, the total spend will still be less ultimately, I mean, theoretically, than what it is today. So I still think it’s a win-win.
You know, what are the realized savings going to be? We’re not sure yet because those price negotiations haven’t been completed. But we’re hopeful that, you know, a couple of the key components in this bill are going to really help drive healthier patients.
Brian Brito is the VP of Pharmacy for CareMax. Brian, thanks so much for your time.
Brito: Absolutely. It was a pleasure. Thank you, Tom.
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