White House Names First 10 Drugs for Medicare Negotiations; USC Policy Experts Available to Discuss Market Impact

Today Medicare released the list of the first 10 drugs subject to price negotiations under the Inflation Reduction Act (IRA), aiming to reduce drug costs for Medicare enrollees and taxpayers.

Experts from the USC Schaeffer Center for Health Policy & Economics, the USC Sol Price School of Public Policy and the USC Alfred E. Mann School of Pharmacy and Pharmaceutical Sciences are available to provide perspective on what drug negotiations mean for the industry.

• “If they don’t tie process to value, it’s not clear whether they’ll get the savings that the Administration is promising,” said Dana Goldman, dean of the USC Price School and co-director of the USC Schaeffer Center. “We also worry about the signal it is sending to future innovators: Don’t develop a drug that helps too many.”  

Goldman recently co-authored a white paper on mitigating the IRA’s adverse impacts on the market. His expertise includes health economics and finance, health policy, the role of prevention in healthcare, healthcare reform and pharmaceutical regulation and innovation. 

• “Efforts to ensure essential medicines are affordable to older Americans are important, yet it is also critical to ensure equity in the selection of the drugs eligible for these lower drug prices,” explained Dima Qato, senior fellow at the USC Schaeffer Center and Hygeia Centennial Chair and associate professor at the USC Mann School. “What about high-cost drugs that are more common among older Black – but not White – Americans? What about high-cost drugs that treat rare diseases or cancers that disproportionately affect Black individuals? The failure to ensure equity in the selection of drugs for which drug pricing is negotiable may worsen disparities in access to essential medicines among older adults in the U.S.”

As director of the program on medicines and public health at the USC Mann School, Qato focuses her research on drug utilization, access to medicines, and pharmaceutical policy both in the U.S. and globally. Qato recently co-authored a study analyzing the impact of the IRA’s $35/month cap on insulin fills. 

• “While reduced prices may lower spending for these specific drugs, it can also introduce several unintended consequences, including reduced rebates, higher list prices of new drugs at launch, and lower investment in the development of high-value drugs,” explained Alice Chen, senior fellow at the USC Schaeffer Center and associate professor of public policy and vice dean for research at the USC Price School.

Chen examines how providers respond to financial incentives, studies how regulation affects pharmaceutical markets, and considers how health spending affects health and labor indicators. She recently co-authored a perspective piece on how the IRA can have unintended consequences.

• “While pharmaceutical manufacturers are just one of several entities responsible for high prescription drug costs, this Act targets one of their most common ploys of extending patents far beyond their initial expiration date,” said Geoffrey Joyce, director of Health Policy at the USC Schaeffer Center and an associate professor and chair of the Department of Pharmaceutical and Health Economics at the USC Mann School. “If done judiciously, the effects on innovation should be minimal.”

Joyce’s research focuses on the costs of medical care and the role of insurance. Joyce recently co-authored a study on preferred pharmacy network incentives published in The American Journal of Managed Care.

• “Contrary to the way the IRA is being defined, the government is not ‘negotiating’ with drug companies; it is ‘price setting’ and government price-setting always leads to shortages,” said Joe Grogan, nonresident senior fellow at USC Schaeffer Center and former assistant to President Donald J. Trump and director of the Domestic Policy Council. “In this case, the IRA is creating shortages of cures and therapies for today’s and tomorrow’s patients.”

Grogan is a health policy thought leader who has played a key role in the health sector’s most consequential debates of the last decade. He recently wrote an opinion piece on the IRA in The Wall Street Journal.