The 15 targeted medicines
The products slated for negotiation, their primary indications and the companies that market them are as follows:
- Anoro Ellipta – chronic obstructive pulmonary disease – GSK
- Biktarvy – human immunodeficiency virus – Gilead Sciences
- Botox/Botox Cosmetic – multiple therapeutic and cosmetic uses, including chronic migraine – AbbVie
- Cimzia – rheumatoid arthritis, Crohn’s disease and other autoimmune conditions – UCB
- Cosentyx – plaque psoriasis and additional autoimmune disorders – Novartis
- Entyvio – ulcerative colitis and Crohn’s disease – Takeda
- Erleada – prostate cancer – Janssen Biotech
- Kisqali – breast cancer – Novartis
- Lenvima – several advanced cancers – Eisai
- Orencia – rheumatoid arthritis and psoriatic arthritis – Bristol Myers Squibb
- Rexulti – schizophrenia – Otsuka Pharmaceutical
- Trulicity – Type 2 diabetes – Eli Lilly
- Verzenio – breast cancer – Eli Lilly
- Xeljanz/Xeljanz XR – rheumatoid arthritis and other inflammatory conditions – Pfizer
- Xolair – asthma and certain allergies – Genentech
CMS selected the medicines based on total gross program spending, not list prices. Under the Inflation Reduction Act, the agency is required to negotiate with manufacturers whose products lack generic or biosimilar competition and have surpassed specific market-exclusivity thresholds.
Limited revenue exposure for most manufacturers
Investment analysts tracking the impact on drugmakers suggest the financial hit may be modest for most companies. According to a recent client note from Leerink Partners, Medicare revenue attributable to 14 of the 15 medicines represents no more than 3% of those firms’ projected global sales in 2027. The primary exception is Gilead Sciences’ HIV therapy Biktarvy, which is estimated to derive about 8% of the company’s worldwide 2027 revenue from Medicare reimbursements.
Eli Lilly’s weekly glucagon-like peptide-1 injection Trulicity, a predecessor to the obesity treatment Zepbound and diabetes drug Mounjaro, appears on the list, but analysts expect the brand’s share of overall Medicare exposure to remain limited as newer formulations gain traction.
The negotiation process will unfold over the next several years. Manufacturers must submit data on research costs and production expenses, while CMS will evaluate clinical benefit, therapeutic alternatives and the government’s own development contributions before proposing a “maximum fair price.” If a company refuses to participate, it faces excise taxes or removal of its product from Medicare and Medicaid coverage.
Additional background on the negotiation framework can be found on the CMS website, which details timelines and enforcement mechanisms (Centers for Medicare & Medicaid Services).
Record Medicare Advantage settlement for Kaiser Permanente
Separate from the pricing initiative, Kaiser Permanente has agreed to pay $556 million to settle federal allegations that it improperly boosted risk-adjustment payments in the Medicare Advantage program. The accord, announced on January 14, represents the largest settlement to date involving risk-score inflation in privately managed Medicare plans.
The U.S. Department of Justice contended that, between 2009 and 2018, Kaiser’s health plan submitted unsupported diagnosis codes that made beneficiaries appear sicker than they were. Under Medicare Advantage rules, plans receive higher payments for members with greater documented health risks. Federal prosecutors alleged Kaiser employees added diagnoses to patient records after clinical visits, even when the conditions were not addressed, thereby generating around $1 billion in excess government payments.
Imagem: Internet
The settlement resolves a whistleblower lawsuit first filed in 2014 by a longtime Kaiser physician and later joined by the government. The company did not admit liability and said it chose to settle to avoid prolonged litigation. In addition to the financial penalty, Kaiser entered into a five-year corporate integrity agreement that requires enhanced compliance measures and independent monitoring.
Regulatory pressure intensifies on Medicare Advantage
CMS signaled a tighter stance toward Medicare Advantage plans one day after the Kaiser announcement, proposing payment rates for 2025 that are effectively flat compared with 2024. The agency also introduced policies aimed at curbing aggressive coding tactics, moves that surprised investors and sent share prices of large insurers lower.
Health policy analysts view the rate proposal and the Kaiser settlement as part of a broader effort by regulators to reduce overpayments in Medicare Advantage, which now enrolls more than half of all Medicare beneficiaries. The government’s scrutiny centers on the risk-adjustment model, a key determinant of plan reimbursement.
Industry groups have argued that lower payments could limit supplemental benefits and raise premiums for seniors. CMS, however, maintains that accurate coding and transparent practices are essential to safeguard taxpayer funds and ensure program sustainability.
Outlook
For drugmakers, the inclusion of Part B therapies in Medicare negotiations sets a precedent that could broaden the scope of future rounds. While the immediate financial exposure appears limited for most companies, the longer-term impact will depend on how negotiated prices influence commercial contracting and competition.
For insurers, the Kaiser settlement and potential payment adjustments underscore mounting regulatory oversight of Medicare Advantage. Additional enforcement actions or policy changes could reshape business strategies across the sector.
Both developments signal an intensified federal focus on controlling health-care spending, highlighting the government’s dual role as the nation’s largest purchaser of medical services and chief enforcer of program integrity.
Crédito da imagem: George Frey / Reuters
