CMS' negotiated drug prices: 12 notes

The largest buyer of pharmaceuticals in the U.S. — Medicare, which covered more than 67 million people as of April — has bargaining power in an industry worth $640 billion. 

12 things to know:

1. CMS gained negotiation authority after President Joe Biden signed the Inflation Reduction Act in August 2022. It allows the agency to negotiate the price of drugs without generic or biosimilar competition that heavily cost Medicare Parts B and D. 

2. The agency released the first round of negotiated prices Aug. 15. Medications on the list treat heart conditions, blood clots, leukemia, lymphoma, Type 2 diabetes, kidney disease, rheumatoid arthritis, psoriasis, Crohn's disease and ulcerative colitis. These negotiated prices for a 30-day supply, listed below, will be effective Jan. 1, 2026.

3. HHS announced 15 Part D drugs selected for the second round Jan. 17. The agency will negotiate with the pharmaceutical companies throughout 2025, and once the discounts are finalized, they will take effect Jan. 1, 2027. 

4. The second round of medications include those approved for cancer, Type 2 diabetes and asthma. They are listed below.

5. CMS also has negotiation powers for 15 Part B or D drugs for 2028 and 20 more Part B or D drugs for each year afterward.

Financial implications for the first 10

6. CMS expects the negotiated prices to reduce healthcare costs by $7.5 billion in 2026.

7. The selected drugs contributed more than $50 billion in gross Medicare costs between June 1, 2022, and May 31, 2023, according to CMS. If the negotiated drug prices were in effect in 2023, it would have saved the federal government about $6 billion in drug costs.

8. Medicare prescription drug coverage enrollees will save an estimated $1.5 billion when the negotiated prices take effect in 2026.

9. The drug negotiation program would have saved the government $26.5 billion 2018 to 2020, according to a recent study published in JAMA Health Forum. 

10. On July earnings calls, CEOs from Bristol Myers Squibb, AbbVie, Janssen and Novartis all expressed confidence that their company's long-term outlooks would not be negatively affected by the negotiated prices, according to CNBC. 

Litigation and criticism

11. Lawsuits filed by Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Johnson & Johnson and Novartis attempted to stop the negotiations but were rejected by federal judges, according to CNN and Bloomberg. A similar lawsuit brought by Merck is awaiting a decision, CNBC reported.

12. After the first list was published, Novartis and Bristol Myers Squibb both said the negotiated prices do not reflect the value of their medications. Giovanni Caforio, MD, former CEO of BMS, has previously denounced the Inflation Reduction Act, saying that the discounted medications will hurt revenue and hinder drug research and discovery. 

The 2026 discounts

The drugs selected for discounts effective Jan. 1, 2027

1. Ozempic, Rybelsus and Wegovy (semaglutide): The first two injectable drugs are approved for Type 2 diabetes, and Wegovy is indicated for chronic weight management and reducing the risk of heart disease. 

2. Trelegy Ellipta (fluticasone furoate, umeclidinium and vilanterol inhalation powder): The oral inhalation medication is approved for chronic obstructive pulmonary disease and adults with asthma. 

3. Xtandi (enzalutamide): The capsule and tablet presentations are prostate cancer treatments.

4. Pomalyst (pomalidomide): The medication is indicated for adults with multiple myeloma or AIDS-related Kaposi sarcoma who have not responded to other treatments. 

5. Ibrance (palbociclib): The capsules and tablets are breast cancer treatments for some adults; conditions include certain receptors and disease progression after endocrine therapy.

6. Ofev (nintedanib): The drug is indicated in adults for treatment of idiopathic pulmonary fibrosis; chronic fibrosing interstitial lung diseases with a progressive phenotype; or systemic sclerosis-associated interstitial lung disease and a slow decline in pulmonary function.

7. Linzess (linaclotide): For adults, the capsules are approved to treat irritable bowel syndrome with constipation and chronic idiopathic constipation. In pediatric patients ages 6 to 17, the drug treats functional constipation. 

8. Calquence (acalabrutinib): It is approved to treat adults with mantle cell lymphoma who are ineligible for autologous hematopoietic stem cell transplantation. It is also indicated for adults with chronic lymphocytic leukemia or small lymphocytic lymphoma. 

9. Austedo and Austedo extended-release (deutetrabenazine): The tablets treat adults with tardive dyskinesia and those with chorea associated with Huntington's disease. 

10. Breo Ellipta (fluticasone furoate and vilanterol inhalation powder): The oral inhalation medication is approved for chronic obstructive pulmonary disease and patients 5 and older with asthma. 

11. Tradjenta (linagliptin): The tablets are approved for adults with Type 2 diabetes. 

12. Xifaxan (rifaximin): The mediation treats patients 12 and older with travelers' diarrhea caused by noninvasive strains. In adults, it also treats irritable bowel syndrome and reduces the risk of overt hepatic encephalopathy recurrence. 

13. Vraylar (cariprazine): The antipsychotic is indicated for adults with schizophrenia, manic or mixed episodes associated with bipolar I disorder, depressive episodes associated with bipolar I disorder, or as an adjunctive major depressive disorder therapy. 

14. Janumet and Janumet extended-release (sitagliptin and metformin hydrochloride): The oral medication is for Type 2 diabetic adults. 

15. Otezla (apremilast): The tablets treat moderate to severe plaque psoriasis and active psoriatic arthritis.