LARGO, MD — President Joe Biden and Vice President Kamala Harris rallied around the government’s release of the negotiated prices for the first 10 drugs impacted by a historic drug pricing law.
But the key figures offered by the administration on Thursday — $1.5 billion in out-of-pocket savings for Medicare patients, and $6 billion for the Medicare program — can’t be verified because the government isn’t releasing the confidential net prices that include rebates and discounts.
The Biden administration’s announcement details deep reductions — in some cases, nearly 80% — to list prices for the drugs. But very few Americans with health insurance actually pay those amounts, which are heavily negotiated by insurers and PBMs.
While it’s impossible to verify how much the discounts contribute to the claimed savings, academics and consultants have offered estimates. They suggest that some drugs on the list make up a large portion of the savings, while others might account for very little.
The largest reductions below current net prices, according to Harvard University’s Benjamin Rome, include Amgen’s Enbrel, Novartis’ Entresto, and J&J/AbbVie’s Imbruvica.
“My guess is these are the drugs driving most of the $6 billion in [Medicare] savings,” he said.
Vanderbilt University’s Stacie Dusetzina explained to Endpoints News that specialty drugs like Imbruvica and Enbrel “are big-budget items for Medicare, and the discounts PBMs negotiate for those drugs tend to be lower because of rules about coverage in the Medicare program.”
But the American Enterprise Institute's Ben Ippolito also noted that even modest changes on other more commonly-used drugs, like Xarelto and Eliquis, “would add up.”
He added that it seems like Eliquis “is a big saver, along with Entresto, Xarelto and Jardiance.”
Drug companies have cautioned that savings from the newly-negotiated prices hinge on whether the drugs stay on formularies when they go into effect in 2026.
CMS deputy administrator Meena Seshamani said in an interview that as part of CMS’ mid-review process, “we will be scrutinizing that to make sure that people have access to the drugs that they need, that these formularies are clinically appropriate.”
‘Sigh of relief’
While the full impact of negotiations remains to be seen, investment analysts at Leerink Partners looked at the results as a “sigh of relief” for pharma companies.
CMS estimated that overall negotiated discounts would have resulted in 22% net savings for Medicare in 2023. Leerink analysts told investors on Thursday that the estimate is “not as bad as anticipated earlier this year.”
Raymond James research analyst and former HHS official Chris Meekins called the results a win for pharmaceutical companies, adding in a note to investors that CMS’ comparison of negotiated prices to list prices “is significantly misleading.”
“You look at what we got today, and it just doesn't seem to be that consequential,” Meekins told Endpoints.
Pharma companies with drugs impacted by negotiations were trading roughly flat on Thursday afternoon.