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The U.S. government has made 10 of its best-selling drugs the first to face tough price controls in a bid to slash health care costs, marking the biggest shakeup in the pharmaceutical industry in decades.

The new rules give the federal government the power to negotiate lower prices on some of the most expensive prescription drugs made by Pfizer, Merck and other pharmaceutical companies and purchased by Medicare, the taxpayer-funded retiree healthcare system.

The reforms, which are strongly opposed by the pharmaceutical industry, are aimed at lowering exorbitant costs for Americans, who have some of the highest prescription drug prices in the developed world. According to Statista, the country will spend more than $600 billion on pharmaceuticals in 2022, accounting for almost half of the global total.

President Joe Biden, who is expected to address the convention, said: “While the pharmaceutical industry is making record profits, millions of Americans are forced to struggle to pay for the medicines they need to live or pay for food, rent and other expenses. basic necessities.” The White House will announce the change later Tuesday. “Those days are coming to an end,” he said.

Negotiations will start this year and the negotiated prices for the 10 drugs will be implemented in 2026, costing Medicare $50 billion in the 12 months to the end of May, the health ministry said. The White House says seniors will need to pay $3.4 billion for these drugs out of pocket by 2022, a burden that is not being reimbursed by insurance companies.

The first 10 drugs to face price negotiations include a diabetes drug called Jardiance sold by Boehringer Ingelheim and Eli Lilly; a stroke prevention drug made by Pfizer Inc and Bristol-Myers Squibb Co drug, called Eliquis; and Novartis’ drug Entresto for heart failure.

The Biden administration has used specific criteria in selecting products for price negotiations, including the cost of health insurance and the level of competition for each drug. More drugs will be added to the government’s negotiating list.

Under the proposed reforms, the minimum discount on drug list prices would be 25 per cent, although the government may be able to negotiate bigger discounts for certain medicines.

The nonpartisan government spending watchdog, the Congressional Budget Office, estimates that the drug price negotiation component of Biden’s reform package could save Medicare more than $100 billion over a decade.

The pharmaceutical industry has filed several lawsuits aimed at blocking reforms that were part of Biden’s inflation-reducing bill. They warn that changes to drug pricing will dent innovation and hinder the development of life-saving medicines.

Industry trade body Phrma said the reforms were the result of a “hasty process” focused on short-term political gain rather than what was best for patients.

Stephen J Ubl, chief executive of Phrma, said: “As a result of (already) strong private market negotiations, many of the medicines selected for pricing already have significant rebates and discounts.”

But a senior White House official said the Biden administration “will not back down” in the face of legal challenges.

“There is no reason why Americans should be forced to pay more than any developed country for life-saving prescription drugs just to fill the pockets of Big Pharma,” the official said. “Pharmaceutical companies are going to court to try and get their Things you can’t get in Congress, that’s preventing negotiations from happening.”

Manufacturers who do not comply with the negotiation process are subject to excise tax, which starts at 65% of product sales in the United States.


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