Millions of Medicare Beneficiaries Use Prescription Drugs That Could Be Subject to Price Negotiation, But Build Back Better Act Provision Exempts Many Drugs With High Federal Spending

Twenty drugs and dozens of insulin products used by 8.5 million Medicare beneficiaries would be subject to government drug price negotiation if the Build Back Better Act (BBBA) were enacted and fully implemented in 2022, according to a new KFF analysis.

The 20 drugs include 18 drugs available to beneficiaries covered under Medicare Part D (typically drugs purchased at the pharmacy) and two drugs covered under Medicare Part B (physician-administered drugs). The list includes drugs used to treat cancer, diabetes, asthma, multiple sclerosis, auto-immune diseases, glaucoma, and osteoporosis, among other ailments. All 42 insulin products currently covered under Part D would be subject to drug price negotiation.

The analysis, which uses Medicare drug spending data for 2019, shows the potential reach of the BBBA drug price negotiation proposal, under the scenario that negotiated prices for 20 top-spending Part B and Part D drugs, and all insulin products, were to take effect this year, in 2022, rather than in 2028, as the legislation calls for. Under the BBBA, negotiated prices for all insulin products plus up to 10 Part D drugs would be available in 2025, while negotiated prices for up to 15 Part D and Part B drugs could be available in 2027.

The analysis finds that the provision still could lower drug prices for some of the top-spending drugs covered under Medicare Part B and Part D, but many of the drugs with the highest total Medicare spending would be exempt from negotiation based on the BBBA criteria that exempts high-spending drugs within a certain number of years from FDA approval or if generic equivalents come to market. 

The Congressional Budget Office has estimated that the current proposal would save the federal government about $80 billion over 10 years, compared to projected savings of $450 billion associated with the earlier legislation.

The House has passed the legislation and sent it to the Senate, which has not taken up the bill. While allowing the federal government to negotiate drug prices is strongly favored by the public, prospects for the bill’s passage in Congress remain unclear.