Study Estimates Which Drugs Will Be in Medicare’s Price-Negotiation Crosshairs From 2026-2028

Medicare will likely focus on 38 Part D and two Part B drugs in the first three years of Medicare drug price negotiation — a provision of the Inflation Reduction Act — and these drugs combined accounted for $67.4 billion in gross Medicare spending in 2020, according to a study published in the Journal of Managed Care & Specialty Pharmacy. The authors identified 40 drugs expected to be negotiated by CMS for 2026-2028 based on “drug age, drug or biologic status, orphan drug status, Part B and Part D gross spending in 2020, and estimates of when a drug will be subject to generic or biosimilar competition.”

The 10 drugs likely to be selected for negotiation in 2026, which include several anticoagulants and cancer therapies, accounted for $33.7 billion of Medicare Part D gross spending as of 2020. The majority of insured people under Medicare formularies have plans that put these drugs under the preferred/preferred (prior authorization and/or step therapy) tier and covered/covered (PA/ST) tiers, according to data from MMIT Analytics. (MMIT is AIS Health’s parent company.) Biden administration officials said that the first 10 drugs selected for negotiation will officially be announced on Sept. 1, 2023. In his 2024 budget, the president called for expanding Medicare drug price negotiation.

The 15 medications expected to be part of Medicare price negotiation in 2027 accounted for $16.4 billion in gross Part D spending in 2020. Starting in 2028, two Part B drugs — Merck’s Keytruda (pembrolizumab) and Bristol Myers Squibb’s Opdivo (nivolumab) — are projected to be eligible for negotiation. Combined with another 13 Part D drugs, the 15 products set for price negotiation in 2028 accounted for $17.2 billion in gross Medicare spending in 2020.

The authors also highlighted costly medications that are ineligible for Medicare price negotiation due to statutory requirements. All but seven drugs were not qualified because of generic or biosimilar competition. Bristol-Myers Squibb and Celgene’s Revlimid (lenalidomide) and AbbVie’s Humira (adalimumab) generated the greatest Medicare gross spending in 2020, but because Revlimid’s first generic launched in 2022 and Humira’s first biosimilar, Amgen Inc.’s Amjevita, launched earlier this year, the brands would be excluded from price negotiation.

NOTES: Expected loss of exclusivity was estimated as the latest reported drug substance or drug product patent expiry date, superseded by any publicly announced patent settlement date. Beginning in 2030, drugs from 12 to 15 years of age will be subject to a minimum 35% discount. Under the pharmacy benefit, the total covered lives under Medicare formularies is 49.8 million. “Preferred” refers to product which is defined by the plan to be covered at the lowest level copay for brand products and most commonly includes Preferred brands. Under the pharmacy benefit, “Covered” refers to product which is defined by the plan to be covered at a higher copay and most commonly includes Non-Preferred brand products. “Specialty” refers to product which is defined by the plan to be covered at the highest-level copay or coinsurance and most commonly includes injectables and unique high-cost products. Under the medical benefit, “Covered” refers to product which is defined by the plan to be covered without restrictions. “Covered (PA/ST)” refers to product which is defined by the plan to be covered with prior authorization and/or step therapy.

SOURCES: Dickson S, Hernandez I. “Drugs Likely Subject to Medicare Negotiation, 2026-2028.” J Manag Care Spec Pharm. 2023 Mar;29(3):229-235. doi: 10.18553/jmcp.2023.29.3.229. PMID: 36840960. Managed Markets Insight & Technology, LLC database as of March 2023.

This infographic was reprinted from AIS Health’s biweekly publication RADAR on Drug Benefits.

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