Biden's IRA & CMS: "For they know not what they do"
Aug 29, 2023 17:42:45 GMT
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Post by icemandios on Aug 29, 2023 17:42:45 GMT
August 29, 2023 07:28 AM EDTUpdated 11:41 AM
Updated: US selects first 10 drugs subject to Medicare price negotiations
Nicole DeFeudis
Editor
Zachary Brennan
Senior Editor
The US on Tuesday unveiled the first 10 drugs that will be subject to price negotiations under the Inflation Reduction Act, including several surprising additions that may face competition from generics before the negotiations start in 2026.
The law requires companies to participate in the pricing negotiations or else pay a steep tax or risk losing Medicare and Medicaid coverage entirely. The negotiated prices for the 10 therapies will take effect Jan. 1, 2026, according to revised guidance published by CMS.
The list included several surprises, such as J&J’s Stelara, which is likely to see biosimilar competition in 2025, and Novo Nordisk’s insulins, which are also likely to see competition in the next two years. Senior administration officials said Tuesday that some drugs that were expected to be on the list based on prior-year data may have been left out because utilization dropped over the last year.
Stacie Dusetzina, professor of cancer research at Vanderbilt University School of Medicine, told Endpoints News that the list includes lots of chronic disease medicines although the negotiated price might not matter in some cases if biosimilar or generic versions come to market between now and 2026. While she noted that there are a couple of drugs where this incoming competition is anticipated, it’s still unclear how CMS sees the threshold of competition that will get the listed drugs out of negotiation.
“There are fewer cancer drugs than expected and Entresto, Farxiga, and Stelara weren’t on prior lists generated from older data so they must have had increased prices or use or both that brought them up to the top of the list,” she said.
Ben Rome of Harvard’s Program On Regulation, Therapeutics, And Law told Endpoints News this morning that he was surprised to see Novo Nordisk’s insulins included on the list because of the potential incoming biosimilar competition. He also said it’s fortuitous that CMS is targeting two SGLT2 inhibitors and two anticoagulants because CMS can now negotiate prices simultaneously for competing drugs in the same class.
He also shared on X, the platform previously known as Twitter, that the average age of the drugs on the list is 14 years, likely making them eligible for a ceiling price that is 60% lower than the average net price of the therapy.
But industry and some prominent Republicans lambasted the list and said it will only lead to reduced innovation, and less investment in small molecule development.
“Today’s announcement is the result of a rushed process focused on short-term political gain rather than what is best for patients,” PhRMA president and CEO Stephen Ubl said in a statement. “Many of the medicines selected for price setting already have significant rebates and discounts due to the robust private market negotiation that occurs in the Part D program today.”
House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA) said in an emailed statement: “While the President gleefully celebrates announcing the first ten drugs forced into his socialist price setting scheme, Americans are already seeing fewer potentially life-saving cures and treatments.”
Beginning in October, the drugmakers on this list will have to sign an agreement with CMS and confidentially provide information on several new data points, including R&D costs and the extent to which those costs have been recouped (abandoned and failed drug costs will be considered), as well as federal financial support for the drug’s discovery and development, and data on revenue and sales volume.
Looming legal battles
Drugmakers are not going to the negotiating table without a fight. Merck was the first to file a lawsuit against the federal government, claiming the negotiation program is unconstitutional and will stymie innovation, particularly among small molecule drugs. That suit was soon followed by others from Bristol Myers, J&J, Boehringer Ingelheim, Astellas and AstraZeneca, among others.
The law is the most aggressive federal drug pricing effort to date and has been roundly criticized by pharmaceutical companies, though some experts have refuted the IRA’s likely impact on R&D.
Analysts at Leerink Partners told investors on Sunday that the negotiated prices are likely immaterial through 2028 because “the estimated profit hits represent a small percentage of global earnings and there will only be a short period of price controls before loss of exclusivities.”
“The IRA law is not all gloom and doom for biopharma, since it will reduce seniors’ out-of-pocket Part D spending and thus benefit compliance,” Leerink analysts wrote.
Drugmakers, on the other hand, view the law as detrimental to their bottom line.
Bristol Myers’ blood thinner Eliquis topped the list of Medicare Part D drugs by total spending in 2021. The company, which sued over the program, argues that the legislation “has already changed the way we look at our development programs in oncology and beyond, whether it’s a decision to advance a new medicine or pursue additional indications for an existing one.”
Eliquis, which was first approved in 2012 to reduce the risk of stroke and blood clots in patients with atrial fibrillation, generated $11.7 billion in sales in 2022 for Bristol Myers. Catherine Owen, senior VP and general manager of US commercial, said she doesn’t anticipate any changes to the company’s financial forecast as a result of the drug being on the list at this time.
The company has decided not to take its multiple myeloma candidate iberdomide into a registrational trial in newly diagnosed patients “because of the forced negotiations, after a period of nine years, would not allow us to generate the right amount of data for that specific product,” Owen told Endpoints News.
“We are concerned that in the future, we will have to make different decisions in our R&D programs and the way we look at them,” she said.
There are “significant unintended consequences that are not yet well understood, such as how this process may create perverse incentives delaying launches, reducing subsequent indications, and chilling evidence generation,” John O’Brien, president and CEO of the National Pharmaceutical Council, said in an emailed statement.
The cases filed by pharma companies are likely to make their way to the Supreme Court, according to legal experts, who have said filing suits in different districts could be a strategy to expedite that process.
Updated: US selects first 10 drugs subject to Medicare price negotiations
Nicole DeFeudis
Editor
Zachary Brennan
Senior Editor
The US on Tuesday unveiled the first 10 drugs that will be subject to price negotiations under the Inflation Reduction Act, including several surprising additions that may face competition from generics before the negotiations start in 2026.
In total, the drugs racked up more than $50 billion in Medicare Part D spending from May 2022 to June of this year, and include three products from Johnson & Johnson as well as blockbusters from Bristol Myers Squibb, Eli Lilly, Merck and others.
The law requires companies to participate in the pricing negotiations or else pay a steep tax or risk losing Medicare and Medicaid coverage entirely. The negotiated prices for the 10 therapies will take effect Jan. 1, 2026, according to revised guidance published by CMS.
The list included several surprises, such as J&J’s Stelara, which is likely to see biosimilar competition in 2025, and Novo Nordisk’s insulins, which are also likely to see competition in the next two years. Senior administration officials said Tuesday that some drugs that were expected to be on the list based on prior-year data may have been left out because utilization dropped over the last year.
Stacie Dusetzina, professor of cancer research at Vanderbilt University School of Medicine, told Endpoints News that the list includes lots of chronic disease medicines although the negotiated price might not matter in some cases if biosimilar or generic versions come to market between now and 2026. While she noted that there are a couple of drugs where this incoming competition is anticipated, it’s still unclear how CMS sees the threshold of competition that will get the listed drugs out of negotiation.
“There are fewer cancer drugs than expected and Entresto, Farxiga, and Stelara weren’t on prior lists generated from older data so they must have had increased prices or use or both that brought them up to the top of the list,” she said.
Ben Rome of Harvard’s Program On Regulation, Therapeutics, And Law told Endpoints News this morning that he was surprised to see Novo Nordisk’s insulins included on the list because of the potential incoming biosimilar competition. He also said it’s fortuitous that CMS is targeting two SGLT2 inhibitors and two anticoagulants because CMS can now negotiate prices simultaneously for competing drugs in the same class.
He also shared on X, the platform previously known as Twitter, that the average age of the drugs on the list is 14 years, likely making them eligible for a ceiling price that is 60% lower than the average net price of the therapy.
But industry and some prominent Republicans lambasted the list and said it will only lead to reduced innovation, and less investment in small molecule development.
“Today’s announcement is the result of a rushed process focused on short-term political gain rather than what is best for patients,” PhRMA president and CEO Stephen Ubl said in a statement. “Many of the medicines selected for price setting already have significant rebates and discounts due to the robust private market negotiation that occurs in the Part D program today.”
House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA) said in an emailed statement: “While the President gleefully celebrates announcing the first ten drugs forced into his socialist price setting scheme, Americans are already seeing fewer potentially life-saving cures and treatments.”
Beginning in October, the drugmakers on this list will have to sign an agreement with CMS and confidentially provide information on several new data points, including R&D costs and the extent to which those costs have been recouped (abandoned and failed drug costs will be considered), as well as federal financial support for the drug’s discovery and development, and data on revenue and sales volume.
CMS has until Feb. 1, 2024 to send initial offers of a maximum fair price, with a justification, to each company for the selected drugs on the list.
Drugmakers are not going to the negotiating table without a fight. Merck was the first to file a lawsuit against the federal government, claiming the negotiation program is unconstitutional and will stymie innovation, particularly among small molecule drugs. That suit was soon followed by others from Bristol Myers, J&J, Boehringer Ingelheim, Astellas and AstraZeneca, among others.
The law is the most aggressive federal drug pricing effort to date and has been roundly criticized by pharmaceutical companies, though some experts have refuted the IRA’s likely impact on R&D.
Analysts at Leerink Partners told investors on Sunday that the negotiated prices are likely immaterial through 2028 because “the estimated profit hits represent a small percentage of global earnings and there will only be a short period of price controls before loss of exclusivities.”
“The IRA law is not all gloom and doom for biopharma, since it will reduce seniors’ out-of-pocket Part D spending and thus benefit compliance,” Leerink analysts wrote.
Drugmakers, on the other hand, view the law as detrimental to their bottom line.
Bristol Myers’ blood thinner Eliquis topped the list of Medicare Part D drugs by total spending in 2021. The company, which sued over the program, argues that the legislation “has already changed the way we look at our development programs in oncology and beyond, whether it’s a decision to advance a new medicine or pursue additional indications for an existing one.”
Eliquis, which was first approved in 2012 to reduce the risk of stroke and blood clots in patients with atrial fibrillation, generated $11.7 billion in sales in 2022 for Bristol Myers. Catherine Owen, senior VP and general manager of US commercial, said she doesn’t anticipate any changes to the company’s financial forecast as a result of the drug being on the list at this time.
The company has decided not to take its multiple myeloma candidate iberdomide into a registrational trial in newly diagnosed patients “because of the forced negotiations, after a period of nine years, would not allow us to generate the right amount of data for that specific product,” Owen told Endpoints News.
“We are concerned that in the future, we will have to make different decisions in our R&D programs and the way we look at them,” she said.
There are “significant unintended consequences that are not yet well understood, such as how this process may create perverse incentives delaying launches, reducing subsequent indications, and chilling evidence generation,” John O’Brien, president and CEO of the National Pharmaceutical Council, said in an emailed statement.
The cases filed by pharma companies are likely to make their way to the Supreme Court, according to legal experts, who have said filing suits in different districts could be a strategy to expedite that process.