Medicare Drug Price Talks: Kiplinger Economic Forecasts

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published May 10, 2023

Healthcare, health insurance and Medicare are hot topics and controversial topics at times too. Developments in this sector naturally impact our well-being and they also have a major effect on the economy and political circles.

To help you understand what is going on and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...

Some early signs of how Medicare will handle drug price negotiations: Officials plan to announce the initial group of drugs later this year, the first 10 of 140 drugs for which the Centers for Medicare & Medicaid Services (CMS) will be able to negotiate the price by 2033.

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This will give manufacturers time to prepare for talks, which will start for Medicare Part D drugs in 2026 and 2027.

Among the factors that CMS will consider in valuing a drug:

Clinical benefits
The net price of alternatives
Research costs
Revenue
Patent protections and
Federal funding

The industry is warning about lower investment in certain kinds of drugs, namely small-molecule drugs, which are exempt from negotiations for seven years after approval by the Food and Drug Administration (FDA) vs. 11 years for large-molecule drugs or biologics. Small-molecule drugs are manufactured via chemical synthesis and include things like aspirin and other “medicine cabinet” pharmaceuticals.

This forecast first appeared in The Kiplinger Letter. Since 1923, the Letter has helped millions of business executives and investors profit by providing reliable forecasts on business and the economy, as well as what to expect from Washington. Subscribe or get a free issue of The Kiplinger Letter.

Housiaux covers the White House and state and local government for The Kiplinger Letter. Before joining Kiplinger in June 2016, he lived in Sioux Falls, SD, where he was the forum editor of Augustana University's student newspaper, the Mirror. He also contributed stories to the Borgen Project, a Seattle-based nonprofit focused on raising awareness of global poverty. He earned a B.A. in history and journalism from Augustana University.