As the US Centers for Medicare and Medicaid Services (CMS) has released the new prices for 15 drugs that have been added to the Inflation Reduction Act (IRA) an expert questions how closely these impact the Trump administration’s Most Favored Nation (MFN) policy.
With the second round of IRA negotiations having been conducted under the Trump administration, GlobalData life sciences research analyst Cyrus Fan, questions what these two different price points will mean.
Fan commented: “The negotiated prices and process give insight into how future rounds will be conducted. While the Trump administration has been advocating for lower drug prices, it has been promoting the MFN executive order more than the IRA. It is not clear how the negotiated prices under the MFN and the IRA will affect each other.”
While agreements made under the IRA remain separate to those agreed under MFN and through direct to consumer (DTC) programmes, some agreements that pharma has made with the administration include deals to drop prices on Medicare and Medicaid.
This includes Novo Nordisk, which reached a deal with the White House to cut Medicare prices for Wegovy and Ozempic to $245 a month under MFN; however, this drug is also included in IRA negotiations. Under the IRA, Novo Nordisk’s Wegovy and Ozempic have been reduced from a list price of $959 down to $274 for a 30-day supply – a higher price than agreed under MFN.
Also on the list is Pfizer’s breast cancer drug Ibrance (palbociclib), which will go down to a cost of $7,871 from $15,741, reflecting a discount of 50%. Pfizer is another company that has come to an MFN agreement with the White House, but it does not appear that Ibrance is included in this agreement.
Drugs treating various cancers, asthma, and other chronic illnesses make up the remaining 13 drugs.
The 15 drugs accounted for $42.5bn, translating to about 15% of total Medicare Part D spending in 2024. Medicare Part D covers outpatient prescription drugs. Overall, Medicare covers more than 67 million people aged 65 and over and those with disabilities.
The lower prices for the tranche of drugs come via the Medicare Drug Price Negotiation Programme, under which CMS directly negotiates the prices of certain high-expenditure drugs with no biosimilar or generic competition.
This is the second round of negotiations under the IRA programme, which was signed into law by former President Joe Biden in 2022.
In August 2024, the Biden administration reached deals on ten prescription drugs, with the price cuts coming into effect in 2026. Medicines such as Pfizer and Bristol Myers Squibb’s blood thinner Eliquis (apixaban) and Amgen's arthritis drug Enbrel (etanercept) were amongst the first batch negotiated.
CMS said the Maximum Fair Prices (MFPs) for the 15 drugs will become effective on 1 January 2027, bringing the total number of negotiated drugs to 25. However, CMS administrator Mehmet Oz was keen to highlight the better discounts achieved this year compared to 2024. The Biden administration said the prices agreed last year are expected to save taxpayers $6bn and provide $1.5bn in savings for patients in 2026.
“This year’s results stand in stark contrast to last year’s. Using the same process with a bolder direction, we have achieved substantially better outcomes for taxpayers and seniors in the Medicare Part D programme — not the modest or even counterproductive ‘deals’ we saw before,” Oz said.
