Top executives at pharmaceutical companies suing to stop the Biden administration’s Medicare price negotiation law are telling shareholders and analysts that the final price offers will not materially affect their companies’ respective bottom lines.
Comments from executives at companies including Pfizer, Bristol Myers Squibb, Johnson & Johnson and AbbVie suggest that the price cuts will not be as steep as many in the industry initially feared.
But executives were still adamant Medicare price negotiations under the Inflation Reduction Act (IRA), which ends Thursday, will limit long-term innovation and expressed hope that a new administration — or lawsuits from the industry – put an end to politics.
The IRA law “is a very big loss to innovation and to the crown jewel of American industry, which is the life sciences technology business,” Pfizer CEO Albert Bourla said Tuesday. “But it is what it is. It’s the law of the land. And we’re doing our best to make sure we minimize any impact, especially in the future.”
The companies that manufacture the 10 medicines eligible for price negotiation have been exchanging offers with the federal government since February.
Although the official end of the negotiation period is August 1, companies have indicated that they already have final offers in hand. The defined prices will be publicly announced by September 1st and will come into force in 2026.
The first 10 drugs selected for negotiation represented $3.4 billion in direct costs for about 9 million Medicare enrollees in 2022, according to the Biden administration.
The law requires that small-molecule drugs, such as pills, have been on sale for at least nine years. The number is 13 years for biologic medications, which are often injected or infused.
“Now that we have seen the final price, we are increasingly confident in our ability to navigate the impact of the IRA on Eliquis,” said Chris Boerner, CEO of Bristol Myers Squibb, during an earnings call with analysts on July 26.
Eliquis is the company’s blockbuster blood thinner, with a list price of $594 per month. Medicare spent nearly $16.5 billion on it between 2022 and 2023, according to the Biden administration, more than any other prescription drug.
Still, Boerner maintained the industry’s position that price negotiation is illegal government price fixing.
“We continue to believe that arbitrary government pricing for life-saving medicines is not good public policy, so regardless of short-term dynamics, we remain very concerned about the long-term impacts of IRA on innovation” , Boerner said.
Many, but not all, of the drugs on the initial list face generic competition and the imminent expiration of exclusive patents, which would likely result in price reductions even without the law. This would also make them ineligible for negotiation in the next round.
Chris Meekins, a health policy analyst at Raymond James, said pharmaceutical companies either accurately anticipated what the negotiated prices would be, or think they can offset the cuts through price increases on other products.
But until the final price is announced, Meekins said the public won’t know what tactic the companies used.
“In most cases, when there’s a political change, companies are incredibly adept at finding ways to limit the pain of the change, and that’s what we see pharmaceutical companies doing,” he said.
Larry Levitt, KFF’s executive vice president for health policy, said it makes sense that, at least initially, the law’s impact could be muted.
“Drug price negotiation only applies to Medicare, and this first round only affects 10 drugs, so it wouldn’t be too surprising if it didn’t have a big effect on pharmaceutical giants’ bottom lines going forward,” Levitt said. .
But “this wouldn’t be the first time companies have expressed optimism to Wall Street while saying the sky is falling on Capitol Hill,” Levitt added.
Several drugmakers, as well as leading industry group PhRMA and the U.S. Chamber of Commerce, have sued the Biden administration to block enforcement of the price negotiation clause.
Most of the lawsuits were unsuccessful, but PhRMA filed an appeal of its case with the 5th U.S. Circuit Court of Appeals, considered one of the most conservative in the country and which has a history of rulings against the Biden administration.
Without commenting on actual prices, several executives said they considered the IRA’s impact on positive growth assessments.
AbbVie CEO Robert Michael said during a call last week that the company included in its forecast an expected impact on sales of Imbruvica, a leukemia drug developed with Johnson & Johnson (J&J).
“We said that even with modeling this impact, we still expect to meet our long-term outlook,” Michael said.
Michael added that price negotiation will “certainly hurt innovation in the long term” and is “hopeful” that a new administration will “reevaluate” these provisions of the law.
Richard Francis, Teva’s chairman and CEO, delivered a similar message on Wednesday about the Austedo drug, which could be part of the next round of negotiations taking effect in 2027.
The company has a sales target of $2.5 billion for the drug in 2027, which it says includes any impact from IRA negotiations.
J&J executive Jennifer Taubert said on July 17 that the company is “not aligned with the IRA and pricing process.” Still, the government’s final numbers “were included in guidance that still looks very good to us today.”
J&J has two drugs on the trading list: the psoriasis drug Stelara and the blood thinner Xarelto.
Meekins noted that executives have an incentive to try to minimize the potential impact, lest they anger shareholders and sink the stock price. But if a Democratic Congress and administration sees the reactions and considers that the law is not strong enough, that will also be a problem.
“Certain people want a pound of flesh from the pharmaceutical industry, and if they think they haven’t gotten it yet, there’s a perception that they’ll keep working until they get it,” Meekins said.
This story originally appeared on thehill.com read the full story
