In Medicare negotiation process, HHS sends first price offers as industry blasts lack of transparency

Despite litigation and denouncements from the biopharma industry, Medicare price negotiations under the Inflation Reduction Act are rolling on. And today, the government is sending out its first round of offers on affected drugs.

The initial offers come amid a multi-year effort by the government to introduce Medicare negotiations, a price-fighting approach the industry has resisted for many years. After the Inflation Reduction Act passed in August 2022, the Department of Health and Human Services (HHS) last summer revealed 10 drugs selected for the first round of negotiations.

Then, in October 2023, the White House said the manufacturers of those medicines each agreed to participate in the process. While the drug companies agreed to participate, they weren't happy about it. At one point, Pfizer CEO Albert Bourla called the process "negotiation with a gun to your head."

On the flip side, the government is celebrating the progress so far. In a Thursday statement, HHS secretary Xavier Becerra called the initial offers "another milestone on the march to ensure people with Medicare get fair prices for prescription drugs."

Featured in the first round of negotiations are Johnson & Johnson’s Imbruvica, Stelara and Xarelto, plus Bristol Myers Squibb and Pfizer’s Eliquis, Merck & Co.’s Januvia, Novartis’ Entresto, Eli Lilly’s Jardiance, AstraZeneca’s Farxiga, Novo Nordisk’s Fiasp and Amgen’s Enbrel. The lucrative medicines are large drivers of Medicare spending, according to the Centers for Medicare & Medicaid Services.

While the industry has many complaints about Medicare negotiations, one is that the details of the pricing talks aren't public. In a statement, Alex Schriver, senior vice president of public affairs at the trade group PhRMA, said that "government bureaucrats are operating behind closed doors to set medicine prices without disclosing for months how they arrived at the price or how much patient and provider input was used."

"This lack of transparency and unchecked authority will have lasting consequences for patients long after this administration is gone," Schriver added.

Besides public complaints, the drug industry is also taking its arguments to court. In one high-profile case, AstraZeneca lawyers were scheduled to clash with the government Wednesday in a Delaware federal court over the legality and implementation of the law.

Separately, lawyers for the HHS recently hit out against Novo Nordisk's IRA lawsuit in a motion for summary judgment. Other drugmakers, including Merck, Johnson & Johnson and Bristol Myers Squibb, have challenged the constitutionality of the law. 

Up next in the process (PDF), the affected companies have 30 days to accept the government's offers or float counteroffers. The negotiation period ends on August 1, and the government plans to publish final prices for the drugs by September 1. Then, the new prices for the 10 drugs go into affect on Jan. 1, 2026.