A pivotal stride in the battle against surging pharmaceutical costs emerged today as the Biden Administration divulged the first set of drugs to undergo the price negotiations process by Medicare. Effective in 2026, this landmark initiative under the Inflation Reduction Act (IRA) takes aim at alleviating the financial strain on American families. Ten drugs, spanning treatments for diabetes, heart failure, autoimmune diseases, and cancer, constitute the inaugural list for these crucial negotiations.
Among the drugs slated for negotiation are recognizable names like Bristol Myers Squibb’s Eliquis, Boehringer Ingelheim and Eli Lilly’s Jardiance, Bayer’s Xarelto, Merck’s Januvia, AstraZeneca’s Farxiga, Novartis’ Entresto, Amgen’s Enbrel, Johnson & Johnson’s Imbruvica, as well as Stelara for Crohn’s disease and insulin formulations Fiasp and Novolog by Novo Nordisk.
While speculation abounded regarding potential stock market reactions, shares of pharmaceutical giants like Merck, Johnson & Johnson, Pfizer, and Bristol Myers Squibb remained steady in pre-trading on Tuesday.
Speaking on background, a White House official emphasized, “The Biden-Harris Administration is resolute in its commitment to lower costs for American families and ensure that essential care remains within reach, undeterred by Big Pharma’s $400 million lobbying endeavors last year.”
In anticipation of their drugs being targeted, half of the affected companies have embarked on legal action against the U.S. Health Department (HHS) and Centers for Medicare and Medicaid Services (CMS), alongside their respective leaders. Notably, Eliquis and Imbruvica are flagged for negotiation, presenting a unique challenge as they approach the expiration of patent protection. The IRA allows these medications to be brought to the negotiation table within 9 to 13 years following their initial patent filing, sparking contentious industry discussions. Firms contend that a significant portion of the patent period is devoted to research and development, despite instances of patent extension beyond the original duration.
Handpicked from a wide array of 7,500 candidates, the selected drugs, encompassed under Part D, account for a substantial portion of recent Medicare expenditures. As per HHS data, “Between June 1, 2022, and May 31, 2023, these selected drugs accounted for $50.5 billion in total Part D gross covered prescription drug costs, approximately 20% of the total Part D gross covered prescription drug costs.”
Although Novo Nordisk’s Ozempic, a potential inclusion based on expenditure, did not make the initial cut, future prospects for its inclusion remain. The medication, which has gained attention for its usage in weight loss treatment, has contributed to escalated healthcare costs for employers.
Companies are poised to initiate negotiation processes starting early in 2024, with finalized negotiated rates expected to be published by CMS in the subsequent September.
As multiple legal challenges unfold in different jurisdictions, the issue could find its way to the U.S. Supreme Court for expedited resolution. These legal contentions challenge the constitutionality of the authority of Medicare regarding price negotiations for high-cost single-source drugs, citing infringements on the First Amendment, Fifth Amendment, and Eighth Amendment. The Biden Administration maintains that the Constitution does not restrict Medicare from setting drug prices.
In response, HHS Secretary Xavier Becerra affirmed, “The landmark Inflation Reduction Act brings us closer to President Biden’s goal of increasing availability and lowering prescription drug costs for all Americans, addressing the record profits of pharmaceutical companies and the escalating prices faced by American families.”
Analysts project limited success in utilizing legal avenues to obstruct the negotiation process, slated for commencement in February. Biopharmaceutical manufacturers have been reassured that their global earnings remain relatively unaffected by the expected impact on profits.
While the IRA has garnered significant public backing, with 83% of Americans in support, concerns linger about the potential adverse repercussions on patient access to medications, particularly within the context of Medicare price negotiations. Industry voices such as AstraZeneca and the lobbying group PhRMA contend that the cost-cutting measures could potentially restrict drug access for seniors under Part D coverage. Amid the ongoing evolution of the healthcare and legal landscape, uncertainties abound regarding the complexities and outcomes of this historic initiative.
Source: Yahoo Finance
