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US Medicare price negotiations powerful move to rein in healthcare costs: Experts

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The Biden administration’s decision to negotiate prices on 10 drugs from the Medicare programme signals a powerful move to governments across the world looking to rein in healthcare costs, say industry watchers.

“Today, Medicare has, for the first time, selected 10 drugs for negotiation. Seniors paid $3.4 billion in out-of-pocket costs for these drugs in 2022,” said the US administration on Tuesday.

The mood has changed across the world, with governments trying to tackle the ever-rising cost of healthcare and companies looking to keep up their sustainability quotient through ESG (Environmental, Social and Governance) features, said a pharma industry veteran, who did not want to be named. The drugs listed for negotiation are top innovator drugs, and if negotiations do bring down costs for senior citizens, it opens the door for more to follow, he added.

The development may not impact generic drugmakers just yet, since these are innovator medicines, say analysts. But the concept of “differential pricing” could become a casualty, they add.

The negotiations could reduce the flexibility of innovator drug companies in providing their drugs at reduced prices in other markets, said the pharma-veteran. After the US, Europe and China are sought-after markets, and they also face pricing pressures. So India could see the benefits of a differential India pricing coming under pressure, said the expert. (Differential pricing involves innovators pricing their drugs in certain markets, at a fraction of the cost in US or other developed markets.).

Common and costly prescriptions

The list unveiled for negotiations were “common and costly prescriptions” that treated from heart failure, blood clots, diabetes, arthritis, Crohn’s disease – and more, US President Biden said in a statement. And this was in addition to reducing the cost of insulin to $35 a month for seniors on Medicare, he pointed out.

They included Jardiance (diabetes and heart failure); Eliquis (blood clots); Xarelto (Clots and cardiac problems); Januvia (diabetes); Farxiga (diabetes/ heartfailure/ chronic kidney disease); Entresto (heart failure); Enbrel (rheumatoid arthritis / psoriasis); Novolog/ flexpen / pefill (diabetes); Imbruvica (blood cancer); Stelara (Crohn’s disease / psoriasis).

Medicare drug price negotiation will result in lower out-of-pocket costs for seniors, and the negotiations for the first group of selected drugs will begin in 2023, with negotiated prices going into effect in 2026, the statement said.

Short-term gains

Big Pharma pushed back saying, the move resulted from “a rushed process focused on short-term political gain rather than what is best for patients.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Stephen J Ubl said: “Many of the medicines selected for price setting already have significant rebates and discounts due to the robust private market negotiation that occurs …. Giving a single government agency the power to arbitrarily set the price of medicines with little accountability, oversight or input from patients and their doctors will have significant negative consequences long after this administration is gone.”

Further, they added, “Politics should not dictate which treatments and cures are worth developing and who should get access to them. The cancer moonshot will not succeed if this administration continues to dismantle the innovation rocket we need to get there. The harm will spread beyond cancer and impact people with rare diseases, mental health illnesses and other terrible diseases.” 





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