More than half of savings in IRA negotiations come from three drugs: report

More than half of the approximately $6 billion that the US government hopes to save through the Medicare Drug Price Negotiation Program of the Inflation Reduction Act will be spent on new report from the nonprofit public policy firm Brookings Institution.

According to the think tank, Amgen's Enbrel (etanercept), Bristol Myers Squibb's Eliquis (apixaban) and Johnson & Johnson's Stelara (ustekinumab) will account for 51.4% of the total savings associated with the Medicare negotiations. In 2026 – the first year the new discounted prices take effect – these three drugs will save the federal government about $3.28 billion, the report said.

On average, the Inflation Reduction Act (IRA) reduced drug prices by 22% – net of drug manufacturers' rebates – the analysis found. However, negotiations had a much greater impact on some drugs than others due to varying rebates and competition before the IRA.

“The estimates show that government negotiations are particularly important for drugs where market forces were most constrained and therefore had the least influence on price concessions,” Brookings wrote in its report, noting that “this was the intent of policymaking.”

For drugs that had already enjoyed deep discounts before the IRA, “negotiations resulted in prices that were likely below the legal maximum price for these products,” the report says, specifically mentioning Farxiga (dapagliflozin) from AstraZeneca, Jardiance (empagliflozin) from Eli Lilly and Boehringer Ingelheim, and Januvia (sitagliptin) from Merck.

For Januvia, the IRA negotiations resulted in an increase in net manufacturer rebates of 18 percentage points.

At the same time, Brookings pointed out that its estimates are based on publicly available data. The think tank had no access to actual rebate figures or the prices of non-federal manufacturers. The net prices of the negotiated drugs are also kept confidential.

Last week, after months of negotiations with drug manufacturers, the Biden administration announced the final maximum fair prices for the first ten drugs subjected to the Medicare Drug Price Negotiation Program – and announced savings estimated at $6 billion when the rebates take effect in 2026. Overall, according to the Department of Health, the negotiations will also reduce Medicare policyholders' co-payments by around $1.5 billion.

However, some analysts and stakeholders have the true value questioned of these savings and points out that many of the discounted drugs are already sold at a much lower price than their list price due to various market factors, including rebates.

Peter Rubin, executive director of the nonprofit No Patient Left Behind, said in a statement that the government's figures were based on the list prices of the drugs rather than actual market prices. “Therefore, there is still no guarantee that Medicare beneficiaries can expect significantly lower prices at the pharmacy counter.”