The White House has revealed significantly reduced prices for 10 prescription drugs affected by the first wave of Medicare negotiations mandated by the Inflation Reduction Act (IRA), the Biden administration initiative that includes several measures designed to lower the cost of healthcare in the U.S.
The reductions were sharp, with list prices for all but one of the 10 medicines sliced by at least 50%. The products taking the biggest pricing hits were diabetes treatments: Merck’s Januvia was hit with a price reduction of 79%, from a monthly price of $527 to $113, while Novo Nordisk’s Fiasp for Type 1 diabetes sustained a 76% price drop, from $495 a month to $119.
Taking the smallest cut of the 10 is the lone cancer treatment, Johnson & Johnson’s Imbruvica, whose price was reduced by 38%, from $14,934 for a monthly regimen to $9,139.
J&J was the only company with more than one drug on the list. Its autoimmune blockbuster Stelara took a 66% drop while blood thinner Xarelto sustained a 62% price reduction.
While a J&J spokesperson allowed that seniors “may see some benefit from out-of-pocket cost caps” in the IRA, the price reductions will cause other patients to have reduced access to provider-prescribed treatments, according to the company.
“The reality of the IRA’s government price setting for US patients will be higher costs, and as seen in other countries with government dictated prices, restricted access and fewer medicines,” the J&J spokesperson wrote in an email. “Furthermore, the law’s arbitrariness and lack of standardized scientific approach in evaluating clinical evidence undervalues the benefit our medicines deliver to millions of patients.”
Novartis, for its part, has seen its top-selling heart failure drug Entresto take a 53% price cut.
In a statement, the company reiterated its view that the price-setting provisions in IRA are unconstitutional, arguing that the move will ultimately limit access to medicines "now and in the future."
"We acceded to a 'maximum fair price' for Entresto for 2026 only to avoid other untenable options including catastrophic fines or the removal of all our products from both Medicare and Medicaid," the company explained.
As for Bristol Myers Squibb, whose blockbuster Eliquis was hit with a 56% price reduction, the company said the negotiated price "does not reflect the substantial clinical and economic value of this essential medicine, which is widely recognized for its effectiveness in reducing stroke-related events, hospitalizations, and extended rehabilitation needs."
The company argued that by focusing on government price setting, IRA overlooks a central problem for patient affordability: how insurance plans determine out-of-pocket costs.
The price reductions (monthly list prices)
| Company | Drug | '23 price | '26 price | Price Cut |
| J&J | Xarelto | $517 | $197 | 62% |
| Imbruvica | $14,934 | $9,139 | 38% | |
| Stelara | $13,836 | $4,695 | 66% | |
| Bristol Myers | Eliquis | $521 | $231 | 56% |
| Eli Lilly | Jardiance | $573 | $197 | 66% |
| Merck | Januvia | $527 | $113 | 79% |
| Amgen | Enbrel | $7,106 | $2,355 | 67% |
| AstraZeneca | Farxiga | $556 | $178 | 68% |
| Novo Nordisk | Fiasp | $495 | $119 | 76% |
| Novartis | Entresto | $628 | $295 | 53% |
Two years removed from his signing of the IRA, Biden’s announcement was a celebration of his landmark achievement. In 2020, his campaign vow to reduce drug prices helped him topple incumbent President Donald Trump. Then his administration brought the IRA to fruition despite considerable opposition from Republicans and the pharmaceutical industry.
If the new prices had been in effect last year, Medicare would have saved an estimated $6 billion, according to a Thursday release from the Department of Health and Human Services (HHS).
“Americans pay too much for their prescription drugs. That makes today’s announcement historic. For the first time ever, Medicare negotiated directly with drug companies and the American people are better off for it,” HHS Secretary Xavier Becerra said in a release.
The products selected for negotiation were the 10 that drive the most government spending in Medicare Part D. Between June 1, 2022, and May 31 the following year, these drugs accounted for $50.5 billion in government spending, or roughly 20% of Medicare’s total expenditure on prescription products, according to the Biden administration.
Softening the blow for drugmakers is that the new prices won’t go into effect until 2026.
The process so far
Following the reveal of the list a year ago by the Centers for Medicare & Medicaid Services (CMS), the drugmakers were given until Oct. 2, 2023, to submit data and information on their medications. CMS then sent an initial offer for each drug’s maximum price earlier this year, giving the companies 30 days to either accept or submit a counteroffer. Drugmakers with products on the list were given up to three negotiation meetings with CMS up through Aug. 1 of this year.
Starting in 2027, the negotiation process will expand to another 15 drugs, with more to come in subsequent years.
From the outset of the IRA’s passage into law, the pharma industry has attempted to fight back against the legislation tooth and nail, with Pfizer CEO Albert Bourla, Ph.D., at one point even referring to the Medicare pricing talks as “negotiation with a gun to your head.”
Industry trade group PhRMA was quick to strike back too, with CEO Steve Ubl calling the pricing scheme a “litany of false promises” that would hurt innovation and provide “almost no relief” to patients.
Wednesday, PhRMA again blasted the IRA measures, saying that they fundamentally alter the “incentives for medicine development.”
“The administration is using the IRA’s price-setting scheme to drive political headlines, but patients will be disappointed when they find out what it means for them,” PhRMA said in a statement. “There are no assurances patients will see lower out-of-pocket costs because the law did nothing to rein in abuses by insurance companies and PBMs who ultimately decide what medicines are covered and what patients pay at the pharmacy.”
Since the bill was passed—and the companies affected by the first round of pricing negotiations were made known—major pharma outfits have repeatedly tried, and failed, to challenge the constitutionality of the IRA in court.
Most recently, Novo Nordisk this summer pledged to appeal after its litigation failed in New Jersey federal court. Novo’s defeat followed a string of legal losses from the likes of Boehringer Ingelheim, AstraZeneca, J&J and BMS.
Federal courts in Texas and Ohio have also knocked back IRA challenges from PhRMA and the U.S. Chamber of Commerce, respectively.
The companies involved in the negotiations have generally argued against IRA along similar lines, contending that the “voluntary” aspect of the pricing measure is anything but given drugmakers’ reliance on Medicare and Medicaid to tap into the U.S. market.
The companies have also suggested the legislation violates their free speech rights, and they have raised concerns related to the separation of powers between government branches.
Meanwhile, IRA’s reforms extend beyond Medicare pricing negotiations. As of 2023, drugmakers now have to pay rebates if their prices in Medicare rise faster than the rate of inflation, with the exception of a few low-cost products.
Back in December, the White House issued a list of 48 Medicare Part B drugs that broke the inflation rule last year, with some drug companies raising prices faster than inflation each quarter.
Some notable entrants on the rebate list included Novartis’ lymphoma and leukemia CAR-T Kymriah, Seagen's Adcetris for lymphoma, plus its Astellas-partnered urothelial carcinoma med Padcev. Amgen’s osteoporosis med Prolia and its acute lymphoblastic leukemia injection Blincyto also made the cut.
For medicines on the list, the federal government planned to invoice drugmakers as a penalty for the speedy price hikes and deposit the rebates into the Medicare Trust Fund, according to a CMS fact sheet issued late last year. From there, the funds went toward patients' coinsurance payments.
Elsewhere, in a direct benefit to seniors, IRA also limits annual out-of-pocket costs for Medicare patients at $2,000. About 1.2 million Part D members spent more than $2,000 out of pocket in 2019, a Kaiser Family Foundation analysis previously found.