The Biden administration is targeting drugs from J&J and Merck for controversial Medicare price negotiations

This morning the Biden administration revealed the first 10 drugs that Medicare will negotiate prices for (which take effect in 2026) under the Inflation Reduction Act (IRA).

Medications include:

• Eliquis, a blood thinner from Bristol Myers Squibb Company

• Jardiance, a diabetes drug from Boehringer Ingelheim and Eli Lilly

• Xarelto, a blood thinner from Bayer

• Januvia, a diabetes treatment from Merck

• Farxiga, a treatment for diabetes from AstraZeneca

• Entresto, a heart failure treatment from Novartis

• Enbrel is a treatment for autoimmune diseases from Amgen

• Imbruvica, a cancer drug from Johnson & Johnson

• Stelara, a treatment for Crohn’s disease from Johnson & Johnson

• Viasp and Novolog, insulin manufactured by Novo Nordisk

This move has not yet hurt the shares of pharmaceutical giants such as Merck (Mark), Johnson & Johnson (JNJ), Pfizer (PFE) and Bristol-Myers Squibb (BMI), whose shares were flat in pre-trading on Tuesday.

“Although Big Pharma spent nearly $400 million in lobbying efforts last year alone, the Biden-Harris administration will continue to fight to lower costs for American families and make sure no American is denied essential care,” a White House official said. Simply because of the cost. he said in the background.

Of those companies whose drugs were on the list, half have already sued the government, including the US Department of Health and the Centers for Medicare and Medicaid Services (CMS) and their leaders, in anticipation of the list targeting their drugs.

Eliquis, manufactured by Pfizer and Bristol Myers Squibb, and Imbruvica, by J&J and AbbVie, were top picks for analysts and experts in the months leading up to the disclosure, which came just days before CMS’ Sept. 1 deadline. Both companies expect to lose their patents in the coming years, but they are subject to IRA rules that allow drugs to be targeted between 9 and 13 years after a patent is first filed.

This timeline has been a major point of contention for drug companies, which argue that at least half the time until a patent expires, 20 years after it has been filed, is spent on research and development. However, companies found ways to extend the life of patents for years afterward.

The drugs, which were chosen from a list of 7,500 selected drugs, are covered under Part D, and represent high spending on Medicare in recent years.

“The Department of Health and Human Services said in a statement Tuesday that these selected drugs accounted for $50.5 billion in total prescription drug costs covered under Part D, or about 20% of total prescription drug costs covered in Part D between June 1, 2022 and May 31, 2023.

Critics have predicted a number of other drugs could be included on a spending basis, including Novo Nordisk.NVO) Ozempic, who did not make the list, but still managed to do so in later years. Diabetes medication, an injection some have begun to use to lose weight, is here It caused a spike in health care spending For employers in recent months.

The companies will begin the negotiation process in early 2024, and CMS will publish the final negotiated prices in September.

More lawsuits are expected

more than Half a dozen lawsuits It has already been filed in various districts across the country, in what some analysts say is an effort to speed up the case to the US Supreme Court. More is expected after the unveiling on Tuesday.

Lawsuits filed by the company allege that Medicare’s powers under the Inflation Control Act to negotiate prices for the most expensive single-source drugs are unconstitutional.

They cite the First Amendment, or free speech, claiming they are forced into a negotiated pricing process; Fifth Amendment, or illegal government appropriation, claiming that Medicare takes drugs at a negotiated price; and the Eighth Amendment, or Excessive Fines, for fines that Medicare can charge for non-compliance.

Biden administration He said Nothing in the Constitution prevents Medicare from setting drug prices.

“For too long, drug companies have generated record profits while American households have been saddled with record prices and unable to afford life-saving prescription drugs. But thanks to the historic Inflation Reduction Act, we are closer to achieving President Biden’s goal of increasing availability,” the Secretary of Health and Services said. Humanitarian Xavier Becerra in a statement Tuesday: “And lower prescription drug costs for all Americans.”

Some analysts They believe that the lawsuits will not succeed in delaying the negotiation process, which is scheduled to begin in February.

Leerink Partners said in an updated note Monday that biopharmaceutical manufacturers’ exposure is inconsequential because the estimated profits that could be affected represent a small percentage of global profits.

“But there could be some downward pressure on expectations agreed late in the decade for certain products if court challenges to CMS’ ability to ‘negotiate’ fail and vendors revise US revenue estimates for exposed products,” Leerink added.

Almost a year after the IRA was first passed, Modern poll It appears that 83% of Americans still support the idea of ​​negotiating drug prices.

And the industry contends that some of those same Americans could be negatively affected by the move.

Companies like AstraZeneca say it has influenced how the company operates invest in research and developmentLobbying group PhRMA says the costs the government is trying to cut will lead to access restriction For medications for the elderly that are included in Part D. Both entities are suing HHS and CMS.

“Many important questions about patient input, patient access, negotiated formulations, and therapeutic alternatives remain unanswered even as the process begins in earnest,” John O’Brien, president and CEO of the National Pharmaceutical Board, said in a statement. Intent is not yet well understood, such as how this process can create perverse incentives that delay launches, reduce subsequent indicators, and generate frightening evidence.

Follow Anjali on Twitter @AnjKhem.

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