PFE - Biden budget to save $160B by allowing Medicare to negotiate prices for more drugs

2023-03-09 13:55:10 ET

President Biden said his proposed budget will save the federal government $160B over 10 years by allowing Medicare to negotiate the prices of more drugs.

The president added that the budget allows Medicare to negotiate drug prices more quickly after launch compared to current policy.

Biden appears to be picking up where he left off with drug pricing reforms included in the Inflation Reduction Act passed in 2021.

Those reform say that beginning in 2026, the Department of Health and Human Services ("HHS") can choose 10 drugs from among the top 50 in Medicare Parts B and D to be discounted. Twenty more would be added by 2029.

For drugs marketed more than nine years, a minimum 25% discount is required ; greater than 12 years, 35%; and greater than 16 years, 60%.

Some of the highest spend by Medicare on drugs include Pfizer ( NYSE: PFE )/Bristol-Myers Squibb's ( NYSE: BMY ) Eliquis (apixaban), AbbVie's ( NYSE: ABBV ) Humira (aducanumab), Regeneron Pharmaceuticals' ( REGN ) Eylea (aflibercept), Bristol's ( BMY ) Revlimid (lenalidomide), and Merck's ( NYSE: MRK ) Keytruda (pembrolizumab).

Also, the budget gives HHS the power to negotiate additional Medicaid drug rebates on behalf of states to boost buying power, The Wall Street Journal reported.

The Journal said the budget proposal also includes a provision that Medicaid managed care providers must reimburse the Centers for Medicare & Medicaid Services if they charge more than the cost of patient care.

Medicaid managed-care providers: Humana ( HUM ), Molina Healthcare ( MOH ), and Centene ( CNC ).

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