In January 2025, the US Department for Health and Human Security (HHS) announced the addition of 15 more Medicare Part D drugs selected for price negotiations.
This HHS announcement came through the Centers for Medicare & Medicaid Services (CMS) and is as a result of the Inflation Reduction Act (IRA). It also comes following the 10 drugs that were selected in 2023 [1] which will have new prices taking effect in 2026. The IRA is designed to address the rapid rate of increase in Part B drug spending and lower costs for Medicare enrollees [2]. Negotiations with the manufacturers of these drugs will take place in 2025, with the new prices set to take effect in 2027.
Between November 2023 and October 2024, approximately 5.3 million Medicare Part D beneficiaries used these medications to treat conditions including cancer, type 2 diabetes, and asthma. These drugs accounted for around US$41 billion—or 14%—of total gross prescription drug spending under Medicare Part D during that period. When combined with the spending on the 10 drugs selected in the first negotiation cycle, the total will now represent over one-third of all gross prescription drug costs under Medicare Part D.
The selected drug list for the second cycle of negotiations is presented in Table 1. Three selected drugs are for diabetes treatment, but only Ozempic, Rybelsus, Wegovy (semaglutide) are biologicals.
| Table 1: Selected drug for the second cycle of CMS price negotiations
|
| Drug name
|
Therapeutic area
|
| Austedo; Austedo XR
|
Tardive dyskinesia and Huntington's disease chorea
|
| Breo Ellipta
|
Asthma
|
| Calquence
|
Chronic lymphocytic leukaemia
|
| Ibrance
|
HR+, HER2- breast cancer
|
| Janumet; Janumet XR
|
Type 2 diabetes
|
| Linzess
|
Irritable Bowel Syndrome
|
| Ofev
|
Idiopathic pulmonary fibrosis (IPF)
|
| Otezla
|
psoriasis and psoriatic arthritis
|
| Ozempic; Rybelsus; Wegovy
|
Type 2 diabetes
|
| Pomalyst
|
multiple myeloma and AIDS-related Kaposi sarcoma
|
| Tradjenta
|
Type 1 diabetes mellitus
|
| Trelegy Ellipta
|
COPD
|
| Vraylar
|
Schizophrenia and bipolar disorder
|
| Xifaxan
|
Irritable Bowel Syndrome
|
| Xtandi
|
Prostate cancer
|
In coming years, CMS will select for negotiation up to an additional 15 drugs for the third cycle of negotiation (including drugs covered under Part B and Part D), and up to 20 more drugs for each cycle after that, as outlined in the IRA.
Despite its intentions to improve patient access to drug products, the IRA’s ‘small molecule penalty’ has been said to be impacting pharmaceutical innovation by discouraging investment in small molecule drug development (used in over 90% of US prescriptions) due to reduced timeframes for recouping costs. Since the IRA’s implementation, investment in these drugs has dropped by 70%, shifting focus toward biologicals, which receive more favourable treatment under the law.
Critics argue this shift endangers patient access to essential treatments and could undermine future innovation. Additionally, analyses suggest the IRA’s promised savings, such as the projected US$6 billion from Medicare drug price negotiations, may be overstated and could actually lead to higher out-of-pocket costs for many patients. Former HHS official Reilly stresses that existing mechanisms like pharmacy benefit manager (PBM) reform—already supported across party lines—offer more effective and immediate cost-control solutions without harming innovation or patient care [3].
‘The IRA's drug price controls are already hindering investment in critical drug research and development, undermining the innovation that has long made the US a global leader in biopharmaceutical breakthroughs,’ said Mr Michael Reilly, ASBM Executive Director and former Associate Deputy Secretary in the USDepartment of Health and Human Services [4].
Related articles
Inflation Reduction Act explained
Medicare drug price negotiation: what next?
References
1. GaBI Online - Generics and Biosimilars Initiative. First drugs for Medicare price negotiation selected [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2025 Apr 11]. Available from: www.gabionline.net/policies-legislation/first-drugs-for-medicare-price-negotiation-selected
2. GaBI Online - Generics and Biosimilars Initiative. New guidance for Medicare Drug Price Negotiation Program [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2025 Apr 11]. Available from: www.gabionline.net/policies-legislation/new-guidance-for-medicare-drug-price-negotiation-program
3. Reilly MS, Barker TR, Clapton CM, Potts SJ, Spiegel A. Medicare drug price negotiations: impact on healthcare development and patient access to medicines. Generics and Biosimilars Initiative Journal (GaBI Journal). 2023;12(3):95-105. doi:10.5639/gabij.2023.1203.015
4. GaBI Online - Generics and Biosimilars Initiative. Decoding US IRA and Medicare drug price negotiations [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2025 Apr 11]. Available from: www.gabionline.net/reports/decoding-us-ira-and-medicare-drug-price-negotiations
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