The U.S. pharmaceutical industry is actively lobbying for revisions to the Medicare drug price negotiation provisions of the Inflation Reduction Act (IRA).
The IRA empowers Medicare to negotiate prices for costly drugs, potentially leading to price cuts ranging from the statutory minimum of 25% to a significant 60%.
In September, the U.S. Department of Health and Human Services (HHS), working via the Centers for Medicare & Medicaid Services (CMS), released final guidance for the second cycle of the Medicare Drug Price Negotiation Program.
The initiative aims to provide lower drug prices starting in 2026 and 2027.
The first round of negotiations focused on ten specific drugs.
Medicare recipients could save approximately $1.5 billion in out-of-pocket costs when the new prices take effect in 2026.
Industry representatives are targeting changes under a potential Trump administration, aiming to extend the timeline for certain drugs’ eligibility for negotiations, Reuters highlighted, citing sources familiar with the matter.
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By February 2025, CMS will select up to 15 additional drugs for the second round of negotiations. The selected drugs will undergo negotiations in 2025, with new prices becoming effective in 2027.
President Joe Biden wants to expand the number of prescription drugs eligible for Medicare price negotiations. Instead of the current limit of 20 drugs per year, he suggests raising it to at least 50. Also, some popular weight loss and diabetes drugs could be targeted in the next round of negotiations, which is set for 2027.
A Reuters report highlights that lobbyists and executives from major pharmaceutical and biotech companies are advocating for a four-year delay in negotiating eligibility for small-molecule drugs, such as pills, which comprise the majority of medications.
Under current rules, these drugs are subject to negotiations nine years after launch, compared to 13 years for biologics. Drugmakers argue this timeline discourages innovation for more affordable, convenient therapies.
Since its passage in 2022, the IRA has drawn industry criticism, with claims that it could stifle research and development.
Also, major pharmaceutical companies involved in the first U.S. negotiations over Medicare drug prices expect limited business impact despite anticipated price cuts.
Some pharmaceutical firms have engaged directly with President-elect Donald Trump’s transition team members to propose amendments to the IRA.
These companies hope that Republican majorities in Congress will be receptive to aligning negotiation timelines for all drugs, removing distinctions between pills and biologics.
Not everyone agrees with the industry’s position. The report cites S. Sean Tu, a law professor at West Virginia University, who says the proposed changes unfairly benefit drug companies. He told Reuters that the current nine-year exclusivity period already supports innovation and warns that extending it would burden patients more without offering significant benefits.
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