The Centers for Medicare and Medicaid Services (CMS) released its first negotiated drug price list on Thursday morning and received a muted response on Wall Street. But representatives from industry and government spoke out – and did not hold back.
The negotiating authority was part of the Inflation Reduction Act (IRA), which President Joe Biden signed into law in 2022.
CMS spent a year negotiating with eight manufacturers to set final prices that will take effect in 2026. Before the prices were announced, the companies indicated in second-quarter conference calls that they could absorb the impact of the negotiated prices they had seen at that time.
The companies have all sued the U.S. Department of Health and Human Services (HHS), which oversees the CMS, and the heads of both agencies, calling the bargaining power unconstitutional. In addition, the companies used the opportunity to criticize the IRA, saying it puts too much pressure on the pharmaceutical industry and does nothing to rein in insurers’ premium increases. They added that it does not prevent pharmacy benefit managers (PBMs) from eliminating coverage of the drugs — since the discounts they receive from them would likely decrease — and they warned that the joint effort could limit access for seniors.
The federal government has already announced $5 billion to help with the expected premium increases. Here’s what all the players are saying since the announcement Thursday morning:
industry
PhRMA: “The government is using the IRA’s pricing system to grab political headlines,” the pharmaceutical industry trade association said in a statement, “but patients will be disappointed when they learn what it means for them. There is no guarantee that patients will pay lower out-of-pocket costs because the law did nothing to curb abuse by insurance companies and PBMs, which ultimately decide which drugs are covered and what patients pay at the pharmacy. As a result of the IRA, there are fewer Part D plans to choose from and premiums are rising. In the meantime, insurers and PBMs are covering fewer drugs and say they intend to impose further coverage restrictions if the pricing system is implemented.”
Johnson & Johnson (JNJ): “The reality of government price setting through the IRA will mean higher costs for U.S. patients, and like other countries with government-mandated prices, limited access and fewer medicines. While seniors may benefit from a cost cap, patients’ access to treatments prescribed by their doctors should not be unfairly and unnecessarily restricted.”
Bristol-Myers Squibb (BMY): As a result of the negotiations, the company released expected sales for its blood thinner Eliquis for 2026 and 2027. Estimated sales appear to be slightly lower compared to sales of $11.8 billion in 2023. The new ranges are between $10.5 billion and $12.5 billion in 2026 and between $8.5 billion and $11 billion in 2027.
Tony Carrk, CEO of Accountable.US: The patient representative supports the new prices.
“The CEOs of Big Pharma and their army of lobbyists have spared no expense to defend a system rigged in their favor that puts profits and price gouging above people’s health. The Biden-Harris administration has made the well-being of millions of Americans a priority and taken a decisive step to reduce costs for millions.”
Larry Levitt of KFF: “The very first price negotiation with the government was a kind of Goldilocks situation. There were some savings, but not so many that the pharmaceutical companies would have backed out,” said the research group’s vice chairman for health policy.
Government
President Joe Biden: “This historic milestone is only possible because the Inflation Reduction Act was passed under Democratic leadership in Congress and Vice President Harris cast the deciding vote in the Senate – without a single Republican voting for it. We have shown that great progress can be made for the American people when we work together against special interests, even as the pharmaceutical industry continues to try to prevent lower prices for consumers in court. But the Vice President and I are not giving up. We will continue to fight to ensure that all Americans pay less for prescription drugs and to give American families more flexibility.”
Health Minister Xavier Becerra: “The Congressional Budget Office projected savings of $100 billion over 10 years from drug negotiations, and $3.7 billion in the first year alone. Today, we are announcing that we will save Medicare $6 billion in the first year of our negotiations, and that Americans who pay out-of-pocket will save an additional $1.5 billion in the future. By giving Medicare the ability to negotiate prices, we will not only strengthen the program for generations to come, but we will also put a stop to skyrocketing drug prices.”
Following are some excerpts from the second-quarter conference calls prior to Thursday’s earnings announcement, which outlined how the IRA is impacting the business and the expected impact of negotiated drug prices.
Christopher Boerner, CEO of Bristol Myers Squibb: “Now that we have seen the final price, we are increasingly confident that we can manage the impact of IRA on Eliquis.”
AstraZeneca (AZN) CEO Pascal Soriot: The company is investing more in drugs that have a longer protection period before CMS would negotiate with them and plans to delay launch in the U.S. to take advantage of greater sales potential in the period before CMS can negotiate prices.
“So in some ways we’re moving away from small molecules a little bit. We’ll launch them globally, but in the U.S. we’ll have to wait to file because we can’t start the clock on a small indication… where we would have low sales for a couple of years or three years. So those are some of the effects of the IRA, and they’re pretty unfortunate.”
Jennifer Taubert, Executive Vice President at Johnson & Johnson: “Those numbers have been incorporated into the guidance we provided … that continues to look very good to us today. It’s very consistent today.”
Anjalee Khemlani is the senior health reporter at Yahoo Finance and covers all things related to pharma, insurance, care services, digital health, PBMs, and health policy and policy. Follow Anjalee on all social media platforms @AnjKhem.
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