Changes in Medicare law will help some patients who need costly rheumatology treatments, including several medicines for which competition has been kept in check for many years.
In fact, this field of medicine includes prime examples of the kinds of products that drove Congress to give the giant federal health program leverage to try to restrain rising pharmaceutical costs through negotiations. The Inflation Reduction Act, signed into law by President Joe Biden on Aug. 16, also provides some fairly quick aid for people enrolled in Medicare who struggle with pharmacy bills.
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As described in an official summary from the Congressional Research Service, the law establishes:
- A cap on annual Medicare Part D out-of-pocket spending that starts in 2025 at $2,000, with planned annual adjustments thereafter.
- A limit on cost-sharing under Medicare Part D for a month’s supply of covered insulin products at $35 for 2023 through 2025, with plans for continued limits on this cost in the years after pegged to negotiated prices.
- A program under which drug manufacturers provide discounts to beneficiaries who have incurred costs above the annual deductible beginning in 2025.
- A requirement that drugmakers issue rebates to Medicare for certain brand-name drugs covered without generic equivalents for which prices increase faster than inflation.
- An obligation for Medicare Part D plans to pay for adult vaccines that are recommended by the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices without requiring cost sharing.
The law’s marquee health provision sets the stage for Medicare, the nation’s largest purchaser of drugs, for the first time to leverage its clout directly in negotiating for lower costs for medicines. Democrats sought to build what amount to guardrails into this program, seeking to spare from competition new and innovative drugs and ones developed by smaller companies. Drugs likely to soon face competition from copycat versions also would fall outside of the pool for negotiations.
In effect, the design of the program would allow Medicare to negotiate in the future in cases such as those seen in recent years with blockbuster medicines often in rheumatology. That’s due in a large part to legal challenges that have helped thwart the introduction of copycat versions of these kinds of products known as biosimilars.
Etanercept (Enbrel) has been sold in the United States since 1998 and adalimumab (Humira) since 2003. Both products face competition from copycat versions called biosimilars in other nations, but the introductions of these products have been delayed in the United States until 2029 for etanercept and 2023 for adalimumab, the Office of Inspector General for the Department of Health & Human Services said in a March 2022 report. The OIG said in the report that the combined 2019 Medicare Part D tab for the two biologics was more than $5 billion.
Rheumatology drugs rival cancer medicines for dominance among the most expensive drugs for people enrolled in Medicare. The average 2020 spending for the most widely used forms of adalimumab by people in Medicare’s Part D pharmacy program topped $51,000, according to federal data. The price per dosage-unit for the drug rose about 7% from 2019 to 2020.
The pharmaceutical industry defends the high introductory costs of medicines and subsequent rising prices as necessary payback for research on products sold and the ones still in development. Since the initial Food and Drug Administration approval of adalimumab on Dec. 31, 2002, Abbott Laboratories and its AbbVie spin-off have made changes to the drug’s administration and paid for studies to expand its approved indications.
Still, the investment in adalimumab appears to have been paid well.
Abbott Labs acquired adalimumab as part of its purchase of BASF’s pharmaceutical operations in 2001, a purchase that also included the thyroid drug Synthroid. Abbott paid $7.2 billion, or roughly $12 billion in current dollars. In 2021 alone, Humira sales were $20.7 billion, with the United States accounting for $17.3 billion of the product’s revenue.