Companies face severe financial consequences for refusing to negotiate — they could be subjected to a high excise tax, up to 95 percent of their total U.S. sales, for instance. A drug maker can opt out of negotiations, but only if they withdraw all of the medications they produce from both the Medicare and Medicaid programs.
The companies have until October 1 to decide what they’ll do, although several pharmaceutical companies, along with the U.S. Chamber of Commerce, are suing the Biden administration over the new standards, with hopes that federal courts will find them unconstitutional.from the plan to force the negotiations.
Although Democrats were largely celebratory over the announcement on Tuesday, advocates for health care reform have noted that negotiations on drug costs aren’t enough to help Americans struggling to afford medication or medical bills.