As myriad pharma industry attempts to challenge the Inflation Reduction Act (IRA) fall flat, Johnson & Johnson is settling into a reality of pricing rebates and Medicare drug cost negotiations.
While J&J is “not in alignment” with IRA or its price setting process, the company has accepted the reality of the situation and baked assumptions about the future costs of its drugs into its growth projections through the end of the decade, Jennifer Taubert, EVP, worldwide chairman, innovative medicine at J&J, said on an analyst call Wednesday.
As it stands, J&J currently expects to grow its business by 3% next year and then 5% to 7% out through 2030, Taubert said.
The company came to that expectation after receiving the final price offers from Medicare on the three J&J drugs up for negotiations, she added. J&J is not disclosing those numbers yet but plans to do so around September, Taubert said.
“Those numbers have been included in the guidance that we provided last year,” she explained.
While certain drug pricing provisions in IRA have already rolled out since the bill was passed in the summer of 2022, the major draw of the law is its ability to empower Medicare to haggle over the prices of certain high-cost drugs starting in 2026.
Of the 10 drugs up for the first round of Medicare negotiations, J&J has the most exposure with three: Imbruvica, Stelara and Xarelto.
Meanwhile, the company can breathe a bit easier thanks to the assumption that Darzalex Faspro, the Halozyme-partnered subcutaneous version of J&J’s multiple myeloma blockbuster, will be safe from price negotiations for the foreseeable future thanks to its under-the-skin formulation, Taubert said.
Taubert made her remarks as J&J reported second-quarter sales growth of 4.3% to $22.4 billion. Of that sum, J&J’s innovative medicine segment did much of the heavy lifting, bringing home $14.5 billion—a 5.5% increase over the $13.7 billion the unit generated over the same period in 2023.
J&J credited much of that innovative medicine momentum to its cancer products Darzalex and Erleada, plus Tremfya and Stelara in immunology and Spravato in neuroscience.
Looking ahead, J&J is banking on additional sales from the planned approvals and launches of Rybrevant plus lazertinib in frontline EGFR-positive lung cancer and Tremfya in inflammatory bowel disease (IBD) in the second half of the year, Joe Wolk, J&J’s chief financial officer, said.
Elsewhere, J&J recently appealed a loss in its legal challenge against the IRA at the U.S. Court of Appeals for the Third Circuit.
J&J argues, like other drugmakers, that the Medicare price negotiations violate its constitutional rights. The company's lawyers allege the process violates the Fifth Amendment by taking private property without proper compensation and the First Amendment by compelling companies to enter agreements that they wouldn't otherwise.