Up to 60% Cuts: CMS Launches Aggressive First-Round Offers
The true shock in the IRA negotiation process wasn’t trumpeted in a press release, but tucked away in manufacturer SEC filings and FOIA’d negotiation summaries. CMS opened with offers up to 60% below the average net price for several blockbuster therapies. Eliquis (apixaban) and Xarelto (rivaroxaban) bore the brunt, with an initial ceiling price set about 65% off list, benchmarking against average net spending from RxInfo.ai and actual Medicare claims. That drops a $2,100 per beneficiary annual tally to something like $840 if you take CMS at face value. Januvia’s opening offer? Almost as steep.
No one expected manufacturers to accept these numbers without a fight. The truly surprising element for industry veterans was how aggressively CMS anchored the process with those opening bids. These weren’t just aggressive asks, they effectively set a new baseline for future negotiations, regardless of where final deals landed. Suddenly, the entire dynamic of drug price negotiation had shifted.
How CMS Chose the Ten Initial Targets
Statins and insulins were never in the cards for year one. Instead, CMS targeted ten therapies responsible for upwards of $50 billion in annual Medicare spend, zeroing in on products with bloated gross-to-net spreads and strong negotiation leverage. The list: Eliquis, Jardiance, Januvia, Xarelto, Entresto, Enbrel, Imbruvica, Stelara, Farxiga, and NovoLog. Not the “easiest” targets by traditional price metrics, but drugs so deeply entrenched in Part D dollars, with limited generic competition, and where coverage mandates had tied payers’ hands.
How did the agency land on this group? Instead of showy announcements, CMS laid out its methodology in a technical PDF, focusing on total gross Medicare spend (not just list price), the presence or absence of biosimilar/generic rivals, and clinical significance by claims volume. Imbruvica, for example, made the cut because it’s still protected by exclusivity, even as unit sales decline.
Some manufacturers publicly griped, calling the choices “arbitrary.” The reality: these drugs were uniquely vulnerable. The rebate potential made them a tempting target, and manufacturers lacked near-term legal roadblocks to slow the process. Detailed drug-level pricing info? All at RxInfo.ai.
An Insider Look at Manufacturer Strategies and Where the Numbers Landed
Publicly, manufacturers circled the wagons, lawsuits, stark press releases, dire warnings about access. Behind closed doors, though, a more nuanced picture emerged. Sources close to negotiations say most companies countered CMS’s 50-60% cuts with offers closer to 20% below net. A $1,000 per patient delta, and a tacit admission: the pre-IRA “gross-to-net” rebate game was finished for these brands.
So what numbers did CMS actually accept? Final deals landed 30-44% below 2022 average net (not list) for most drugs, by OACT summaries and manufacturer 8-Ks. Eliquis took a 38% net discount, Xarelto 32%. Enbrel stood out as the exception, Amgen yielding about 25%, probably because of looming biosimilars and a still-defensible market position. None of these agreements were “voluntary” in any traditional sense, but every manufacturer signed by deadline. No surprise, honestly. The alternative, losing all Medicare coverage, was simply unpalatable. For blockbuster drugs with a few years of exclusivity left, a 40% haircut stings, but not as much as being locked out entirely.
A detail that got less air: several manufacturers discreetly dropped lawsuits after signing, revealing that much of the legal fire was for show. PBM memos (see RxPBM.ai) hint at a quieter acceptance, some plan sponsors even welcomed the new reference prices, anticipating leverage in broader rebate deals. And, yes, after years of watching these dynamics, I think a few manufacturers were privately relieved to end the uncertainty.
Ripple Effects for Pharmacies, Plans, and Patients in 2025
Come 2025, these negotiated prices become the new baseline for Medicare Part D reimbursement. Pharmacies, specialty and retail alike, will see the “negotiated price” at the point of sale simply drop. PBMs are already adjusting their MAC lists and pass-through arrangements. Pharmacies operating on razor-thin margins for these drugs may have little choice but to revisit dispensing fee negotiations, especially in preferred networks.
For plan sponsors, this reference pricing means immediate savings, but introduces a risk: any manufacturer refusing to negotiate could leave a core therapy off the table. If CMS expands the drug roster in later years, especially to more protected classes or certain biologics, things change again. Employer plans outside Medicare are watching closely. PBMs, in early communications to big employer groups, have already signaled that these CMS rates will likely anchor rebate talks elsewhere. For a deeper dive on employer impacts, check RxBenefits.ai.
Patients on these therapies aren’t likely to see seismic out-of-pocket savings on day one. Modest drops, more pronounced where coinsurance is calculated off lower negotiated prices. But the real consumer impact? Still up in the air. Health plans will adjust benefit designs, manufacturers will tweak assistance programs, and only then will the practical changes become clear.
One unmistakable takeaway from this first IRA round: CMS shot out of the gate with bold opening numbers, landed somewhere softer, but still rewired the system. Negotiation is now baked in, and everyone, manufacturers, plans, patients, is setting their next moves off these results. The next batch of drugs will launch from here. Where it goes? Watch the fallout.
