Medicare today announced the first list of 10 drugs that it has chosen to include in the price-negotiation process authorized by the Inflation Recovery Act. The list applies to drugs covered by Part D plans. Lawsuits from drug companies and others seek to invalidate the price negotiation section of the law. And the negotiated prices, if the law is upheld, won’t become effective until 2026. Still, this is an important step that is already affecting the drug industry.
The biggest opportunity for competitive pricing is where there are multiple expensive drugs with similar properties for a particular condition. Whichever comes in at the lowest price wins and goes into the formulary, making it easy for doctors to prescribe and inexpensive for patients. The others are left out; they can still be prescribed but won’t be paid for by insurance unless the doctor can justify that choice to a reviewer. If the other competitors match the low bidder, they may be included on the formulary also. The VA health system has done this for decades and saves billions in the process. It improves quality of care, patient satisfaction, and outcomes.
A Big Day for Drug Prices. Maybe.
The biggest opportunity for competitive pricing is where there are multiple expensive drugs with similar properties for a particular condition. Whichever comes in at the lowest price wins and goes into the formulary, making it easy for doctors to prescribe and inexpensive for patients. The others are left out; they can still be prescribed but won’t be paid for by insurance unless the doctor can justify that choice to a reviewer. If the other competitors match the low bidder, they may be included on the formulary also. The VA health system has done this for decades and saves billions in the process. It improves quality of care, patient satisfaction, and outcomes.