Drugs from J&J, Merck, Novartis, BMS and more set for first round of Medicare price negotiations: CMS

The day drugmakers have been dreading has arrived: Tuesday, the Centers for Medicare & Medicaid Services (CMS) unveiled its list of 10 drugs up for the first price negotiations under the Inflation Reduction Act (IRA).

The drugs that made the price negotiation cut are Johnson & Johnson’s Imbruvica, Stelara and Xarelto plus Bristol Myers Squibb’s Eliquis, Merck & Co.’s Januvia, Novartis’ Entresto, Eli Lilly’s Jardiance, AstraZeneca’s Farxiga, Novo Nordisk’s Fiasp and Amgen’s Enbrel.

Together, the drugs accounted for more than $45 billion in Medicare Part D spending from June 2022 to May 2023, according to a CMS fact sheet (PDF).

Next up, these companies will get a chance to submit data and information on their medications to CMS by Oct. 2. 

Meanwhile, many of the companies are challenging the legality of the IRA in court. It remains to be seen whether any of those efforts can stop the IRA process that's slated to play out over the next couple of years.

As part of the negotiating process, CMS plans meetings with the drug companies on the list this fall. CMS will then send an initial offer for each drug’s maximum price by Feb. 1, 2024, giving companies 30 days to either accept or submit a counteroffer.

Companies will get up to three negotiation meetings with CMS through the period ending Aug. 1, 2024. Then, the negotiated prices are set to kick in Jan. 1, 2026.

Reactions to the list have already been fierce.

Stephen Ubl, CEO of the trade group Pharmaceutical Researchers and Manufacturers of America (PhRMA), called the list “the result of a rushed process focused on short-term political gain rather than what is best for patients.”

Many rebates and discounts already exist for the selected drugs, Ubl said in a statement. He said the existing system includes “robust private market negotiation" for the Part D program.

That sentiment was echoed by Catherine Owen, senior vice president and general manager of U.S. commercial at Bristol Myers Squibb, who said patients already have access to Eliquis with a “relatively low out-of-pocket expense.”

“What’s really important in terms of the facts is that seniors on average pay about $55 per month for Eliquis and over half of all Eliquis patients—whether they’re commercial or Medicare—pay $45 or less,” she said in an interview.

Drugmakers and trade groups have taken their protests to court. Most recently, AstraZeneca and Boehringer Ingelheim challenged the law. In AZ’s case, the company cited the 1983 Orphan Drug Act (ODA) and the “unintended consequences” the new law could have on that legislation. In a statement, the company said the IRA’s Medicare price negotiation measures “run headlong into the goals” of the ODA.

Boehringer, for its part, argued that the price talks would step on its “constitutional and statutory rights.”

That argument is similar to the one made by other drugmakers who’ve sued, such as Merck, BMS and J&J along with the trade group PhRMA.

Even the U.S. Chamber of Commerce has elected to duke it out in court, arguing the pricing provisions in IRA “violate fundamental protections for free enterprise enshrined in our Constitution.” The chamber also sought a preliminary injunction in a bid to stop the program in its tracks.

However, the U.S. Department of Justice (DOJ) hit back, arguing in a filing earlier this month that the injunction effort would be pointless because the normal course of litigation would likely conclude before the pricing controls take effect in 2026. 

DOJ gained a recent ally in AARP in its quest to challenge the chamber’s lawsuit. Last week, AARP argued stopping negotiations before they begin would “only reinforce the substantial harm that the IRA is meant to prevent, adding that it would “protect the pharmaceutical industry’s unreasonable and astronomical profits at the expense of what people with chronic conditions need to survive."