OBJECTIVES: The Build Back Better social spending bill recently passed in the House of Representatives on 19 November includes unprecedented drug pricing controls for drugs covered under Medicare, including empowering the program to negotiate prices for up to 10 highest-cost Medicare drugs annually, starting from 2025 for Part D and 2027 for Part B, and establishing inflation rebates that could notably temper the rate of drug price increases over time. This research analysis aims to identify the drugs likely to be targeted by the Medicare negotiation provision of the proposed legislation.

METHODS: Single-source innovative products with Medicare revenues exceeding $200 million in 2019 (source: CMS), that would have been on the market for more than nine years (small molecules) or 12 years (biologics) at the time of negotiation (source: GPI Pulse) were identified for this analysis. The top-ten high-cost drugs were further categorized as short-monopoly, post-exclusivity, and long-monopoly drugs to estimate the minimum discount required on the new negotiated price.

RESULTS: We identified 22 Part B drugs and 78 Part D drugs (including all insulins) that were Medicare negotiation-eligible. For Part D, total Medicare sales for the top 10 negotiation-eligible products totaled over $36 billion with an estimated $16 billion (-44%) reduction in revenues anticipated if only the price ceiling is applied, excluding rebates. Meanwhile for Part B drugs, the top ten high-cost negotiation-eligible drugs had total Medicare sales of $13 billion with minimum savings expected of around $5.4 billion (-42%).

CONCLUSIONS: According to the Congressional Budget Office (CBO) estimates, the drug pricing provisions in the package could generate federal savings of nearly $80 billion from Medicare negotiated drug prices alone. If enacted, the Build Back Better drug pricing policies could set a new precedent for negotiation of Medicare drug prices with lasting impact on the industry in the US.