Medicare to Finally Begin Rx Negotiation, What Does it Mean? With Armstrong & Getty

10 Drugs 2.5 Years From Now? At least it is a start...

I spent some time on Wednesday morning with Jack and Joe to discuss the latest healthcare news. Set forth below: audio as well as my show notes.

Effective 2026, part of the Inflation Reduction Act. 

Drug makers have a choice, if they don’t want to engage in the negotiation process, they can withdraw from Medicare and Medicaid.  

Only meds that have been on the market for several years without competition are eligible.  

The First Ten:

1. Eliquis, for preventing strokes and blood clots, from Bristol Myers Squibb and Pfizer

2. Jardiance, for diabetes and heart failure, from Boehringer Ingelheim and Eli Lilly

3. Xarelto, for preventing strokes and blood clots, from Johnson & Johnson

4. Januvia, for diabetes, from Merck

5. Farxiga, for diabetes, heart failure, and chronic kidney disease, from AstraZeneca

6. Entresto, for heart failure, from Novartis

7. Enbrel, for arthritis and other autoimmune conditions, from Amgen

8. Imbruvica, for blood cancers, from AbbVie and Johnson & Johnson

9. Stelara, for Crohn’s disease, from Johnson & Johnson

10. Fiasp and NovoLog insulin products, for diabetes, from Novo Nordisk

Action projected to save $100 billion. 

Pharma charges Americans three times what it charges for most drugs in other countries.  

The argument against: Fewer drugs, less innovation. Lower prices in the private market at people like Craig use this in negotiation!  

Eight suits now to stop it.  

Began in 2003 when Bush codified that the government would not negotiate for prices and accept whatever pharma said.  Then Obama exacerbated this by further agreeing to it in Obamacare.  

Another 15 drugs in 2027, again in 2028, and then 20 drugs per year for 2029 and after.  

Avastin v. Lucentis (from Overcharged by Silver & Hyman / Cato).  

• Same active component & both are made by Genentech. 

• Lucentis, however, is 38 times more expensive than Avastin.  Why?  

  • Avastin came 1^st to treat cancer by slowing the growth of blood vessels that feed tumors.  

  • Innovative doctors realized that also was effective for slowing macular degeneration in the eyes for the same reasons. However, to do this, you only needed a very small dose costing about $60 per injection. This accidental discovery meant that Genentech made much less money on the drug. 

  • So, Genentech created Lucentis (same drug new name) and sold it for Macular Degeneration at $2,300 per dose.  38X

  • Because of the absurd price difference, ophthalmologists continued using Avastin. Genentech countered by arguing that was unsafe and refusing to sell in doses easily repacked for eye use. Ophthalmologists then sued, and Genentech backed down.   

• In 2015, Medicare paid more than a billion dollars for Lucentis. Under Medicare rules, doctors were paid 6% of the cost of the drug. So, an average doc prescribing Lucentis made $138 a pop while the noble ones sticking to Avastin could barely buy a small Starbucks Americano.  

So, what do you think? Should we be able to negotiate these prices for taxpayers?