Big Pharma: The government revealed its list of negotiated drug prices. Here are the reactions.
The Centers for Medicare and Medicaid Services (CMS) released its first-ever negotiated drug price list Thursday morning to a muted response on Wall Street. But industry and government officials weighed in— and didn't hold back.
The power to negotiate was included as part of the Inflation Reduction Act (IRA), which President Joe Biden signed into law in 2022.
CMS has spent a year in negotiations with eight manufacturers to land on the final prices, which will go into effect in 2026. Prior to the reveal, companies signaled on earnings calls for the second quarter that they could absorb the impact of the negotiated prices, which they had seen at that point.
The companies have all sued the US Health and Human Services Department (HHS), which oversees CMS, as well as the heads of both agencies, calling the negotiating power unconstitutional. In addition, the companies took the opportunity to criticize the IRA, saying it put too much pressure on the drug industry and did nothing to rein in premium hikes by insurers. They added it doesn't stop pharmacy benefit managers (PBMs) from removing coverage of the drugs — since the rebates they get from them will likely go down — and they warned that the combined effort could reduce access for seniors.
The federal government has already announced $5 billion to help with expected premium hikes. Here's what all the players are saying since the reveal Thursday morning:
Industry
PhRMA: "The administration is using the IRA’s price-setting scheme to drive political headlines," the pharma industry trade group said in a statement, "but patients will be disappointed when they find out what it means for them. There are no assurances patients will see lower out-of-pocket costs because the law did nothing to rein in abuses by insurance companies and PBMs who ultimately decide what medicines 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 going up. Meanwhile, insurers and PBMs are covering fewer medicines and say they intend to impose further coverage restrictions as the price-setting scheme is implemented."
Johnson & Johnson (JNJ): "The reality of the IRA’s government price setting for U.S. patients will be higher costs, and as seen in other countries with government dictated prices, restricted access and fewer medicines. While seniors may see some benefit from out-of-pocket cost caps, patients' access to provider-prescribed treatments should not be unfairly and unnecessarily restricted."
Bristol Myers Squibb (BMY): The company released expected revenue from its blood-thinner drug, Eliquis, in 2026 and 2027 as a result of the negotiations. Estimated revenue appears to drop slightly compared to 2023 sales of $11.8 billion. The new ranges are between $10.5 billion and $12.5 billion in 2026 and $8.5 billion and $11 billion in 2027.
Accountable.US executive director Tony Carrk: The patient advocacy organization is supportive of the new prices.
“Big Pharma CEOs and their army of lobbyists spared no expense to defend a system rigged in their favor, prioritizing profits and price gouging over people’s health. The Biden-Harris administration has made the well-being of millions of Americans the priority, taking a decisive step towards lowering costs for millions.”
KFF's Larry Levitt: "The first ever government price negotiation seemed kind of Goldilocks. Some savings, but not so much to cause drug companies to walk away," said the research group's executive vice president of health policy.
Government
President Joe Biden: "This historic milestone is only possible because of the Inflation Reduction Act, which passed with the leadership of Democrats in Congress, and with Vice President Harris casting the tie-breaking vote in the Senate — without a single Republican voting for it. We showed that major progress can be made for the American people when we work together to take on special interests, even as Big Pharma continues to go to court to try to block lower prices for consumers. But the Vice President and I are not backing down. We will continue the fight to make sure all Americans can pay less for prescription drugs and to give more breathing room for American families."
Health and Human Services Secretary Xavier Becerra: "Congressional budget estimators (Congressional Budget Office) predicted a $100 billion savings over 10 years from drug negotiations, and a $3.7 billion savings in the first year alone. Today we’re announcing that in our first year of negotiations we are saving Medicare $6 billion and Americans who pay out of pocket will be saving another $1.5 billion moving forward. Empowering Medicare to negotiate prices not only strengthens the program for generations to come, but also puts a check on skyrocketing drug prices."
Previous comments
The following are some excerpts from second quarter earnings calls prior to the reveal on Thursday on how the IRA is impacting business and what the expected impacts of negotiated drug prices would be.
Bristol Myers Squibb CEO Christopher Boerner: "Now that we have seen the final price, we're increasingly confident in our ability to navigate the impact of IRA on Eliquis."
AstraZeneca (AZN) CEO Pascal Soriot: The company is investing more in drugs that have a longer protected time before CMS would target for negotiations and is planning to delay US launches to capitalize on greater revenue potential within the timeframe before CMS can negotiate prices.
"So, in a way, we are shifting a little bit away from small molecules. We will launch them around the world, but in the US, we will have to wait before we file because we can't start the clock for a small indication ... where we would record low sales for a couple of years or three years. So those are some of the implications of the IRA, and those are quite unfortunate."
Johnson & Johnson executive vice president Jennifer Taubert: "Those numbers have been included in the guidance that we provided .... that still looks very good to us today. It's very consistent today."
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. Follow Anjalee on all social media platforms @AnjKhem.