Good afternoon! The first round of Medicare drug price negotiations has come to an end – but we still don't know the final prices that the U.S. government and pharmaceutical companies have agreed on.
Medicare will disclose the new negotiated prices for 10 drugs at the beginning of September. Those prices will then go into effect in 2026.
Still, drugmakers appear to be less concerned about the impact of those new negotiated prices on their businesses than in recent months, at least in the short term. They all maintain that Medicare drug price negotiations are a long-term threat to the pharmaceutical industry's drug innovation and profits, but the immediate dust has somewhat settled.
That's based on executive commentary during the recent quarterly earnings calls of Bristol Myers Squibb and Johnson & Johnson, among other companies.
President Joe Biden's Inflation Reduction Act gave Medicare the power to directly hash out drug prices with manufacturers for the first time in the federal program's nearly 60-year history. The process aims to make expensive medications more affordable for older Americans.
On July 26, Bristol Myers Squibb CEO Christopher Boerner confirmed that the company received the government's final price for its blood thinner Eliquis, which it shares with Pfizer.
He said now that the company has seen that price, it is "increasingly confident in our ability to navigate the impact" of Medicare drug price negotiations on the treatment. Bristol Myers will provide more details about the expected impact on its investor relations website once Medicare publicly discloses the final prices, according to Boerner.
Meanwhile, AbbVie CEO Robert Michael said a day earlier that the drugmaker has included the expected sales hit to its top-selling leukemia drug, Imbruvica, in its financial forecasts.
"We've come out and said that even with modeling that impact in, that we still expect to deliver on our long-term outlook," Michael said on the company's earnings call.
On July 17, J&J Worldwide Chairman Jennifer Taubert similarly said the company's long-term growth outlook "still looks very good to us today" after seeing the negotiated prices for its blood thinner Xarelto and psoriasis treatment Stelara.
Novartis CEO Vasant Narasimhan said on July 18 that the short-term impact from Medicare drug price negotiations "might be manageable on our first set of drugs." The company's heart failure drug, Entresto, is among those selected for negotiations.
But Narasimhan said the policy in the long-term is "really not good for innovation [or] good for patients" in the U.S.
"I think it's very important to say the policy is not a good one. It's bad for American patients, it's bad for innovation and [I] sincerely hope that it gets corrected," he said.
Executives at each of the drugmakers similarly emphasized their opposition to Medicare drug price negotiations on their respective earnings calls.
"We continue to believe that arbitrary price setting by the government on life-saving medicines is not good public policy," Bristol Myers Squibb's Boerner said on the company's earnings call. "Irrespective of short-term dynamics, we remain very concerned about the long-term implications of IRA on innovation."
Lawsuits brought by Merck and Novartis against the negotiations are awaiting decisions from district courts. Each case brings claims that overlap with suits from Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, J&J and industry trade groups that have been rejected in recent months.
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