Medicare Delays Price Talks For AbbVie Drug By 7 Years

A consumer advocacy group has analyzed a policy shift by Medicare that delayed price negotiations for a blockbuster AbbVie drug by seven years. The policy shift occurred as the Centers for Medicare and Medicaid Services prepared for a new round of price negotiations with drugmakers.

The Inflation Reduction Act, which became law in 2022, created the process for Medicare price negotiations. However, the Centers for Medicare and Medicaid Services proposed a rule to treat certain newer medicines as the same product as older ones for price control purposes. This proposed rule could shorten the period companies have to recover investments in improving existing medicines.

Pharmaceutical innovation often involves improving existing medicines, which can take years of additional research and investment. For example, the FDA approved a new formulation of Opdivo, a cancer treatment, in late 2024, which reduced preparation and administration time by over 63% and direct provider costs by 17% per treatment episode.

The policy shift by Medicare may hurt taxpayers by delaying price negotiations for the blockbuster AbbVie drug. The delay is significant, as small-molecule drugs generally cannot be selected for Medicare price controls until at least a certain period after their approval.

Context The Inflation Reduction Act was enacted in response to the rising cost of prescription drugs. The policy shift by the Centers for Medicare and Medicaid Services has raised concerns about its impact on pharmaceutical innovation and taxpayer costs. As the Centers for Medicare and Medicaid Services continues to navigate the complex process of price negotiations with drugmakers, the effects of this policy shift will be closely watched.