For the first 10 drug prices negotiated under the Inflation Reduction Act, about one-half of the estimated $6 billion in Medicare savings is the result of negotiations for just three of those drugs, according to a new report from the Brookings Institution, a Washington, DC-based think tank.
CMS last week unveiled the list of negotiated prices for the first time, with the government saying that its work resulted in 22% net savings compared to what Medicare spent on the same 10 drugs in 2023.
Verifying those savings is difficult because the net prices are kept confidential, but Brookings said it dug into the numbers, as well as data from other sources to approximate pre-IRA net prices. It found that Amgen’s Enbrel, Johnson & Johnson’s Stelara and Bristol Myers Squibb’s Eliquis were responsible for 51.4% of the estimated savings, or $3.28 billion.
Stelara, Enbrel and Imbruvica also have little competition and low rebates, meaning “the government negotiations are especially significant for drugs where market forces were most limited and therefore had the least impact on producing price concessions,” according to Brookings.
However, negotiations for high-rebate drugs on the list, like Eli Lilly’s Jardiance and Novo Nordisk’s NovoLog, were less effective and “resulted in prices that were likely to be below the statutory ceiling price for those products. For example, [Merck’s] Januvia saw an 18-percentage point increase in the net of manufacturer rebate price due to negotiation,” Brookings said.
The think tank said its methods for analyzing the data were similar to what CMS used, adding that it’s “notable that the reliance on publicly available information leads us to roughly the same estimates of aggregate savings and the percentage reduction net spending as those reported by CMS.”