NJ drugmakers’ products among first targeted for Medicare price negotiations

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Medications from some of New Jersey’s biggest pharmaceutical companies are among the first 10 being targeted for price setting negotiations under a new government program aimed at driving down the cost of prescription drugs for older Americans.

In an Aug. 29 press release, the U.S. Centers for Medicare and Medicaid Services (CMS) released its list of drugs selected for the inaugural round of Medicare Drug Price Negotiation Program, saying talks with participating drug companies will begin in 2023 and any settled prices will take effect in 2026.

According to CMS, these medications “are among those with the highest total spending” in Medicare Part D, with seniors paying $3.4 billion in out-of-pocket costs in 2022. Additionally, the selected drugs accounted for $50.5 billion in total Part D gross covered prescription drug costs, or about 20% of total Part D gross covered prescription drug costs between June 1, 2022 and May 31, 2023, the administration said.

The drugs selected to undergo negotiations are:

• Eliquis, a blood thinner from Bristol-Myers Squibb and Pfizer
• Xarelto, a blood thinner from Janssen Pharmaceuticals
• Januvia, a diabetes drug from Merck
• Jardiance, a diabetes drug from Boehringer Ingelheim and Eli Lilly and Co.
• Enbrel, a rheumatoid arthritis drug from Immunex Corp.
• Imbruvica, a drug for blood cancers from Pharmacyclics and Janssen Biotech
• Farxiga, a drug for diabetes, heart failure and chronic kidney disease from AstraZeneca and Bristol-Myers Squibb
• Entresto, a heart failure drug from Novartis
• Stelara, a drug for psoriasis and Crohn’s disease from Janssen Biotech
• NovoLog, for diabetes from Novo Nordisk

Drugmakers have until Oct. 1 to agree to participate in the negotiation process. Although taking part is voluntary, companies that choose not to engage face the option of paying excise taxes or terminating their relationships with Medicaid.

Designed to address rising health care costs, the Medicare Drug Price Negotiation Program is part of President Joe Biden’s signature Inflation Reduction Act, which passed last year in a narrow, party line vote.

In a statement accompanying the list of selected drugs, Health and Human Services Secretary Xavier Becerra said, “For far too long, pharmaceutical companies have made record profits while American families were saddled with record prices and unable to afford life-saving prescription drugs. But thanks to the landmark Inflation Reduction Act, we are closer to reaching President Biden’s goal of increasing availability and lowering prescription drug costs for all Americans.

“Although drug companies are attempting to block Medicare from being able to negotiate for better drug prices, we will not be deterred. The Biden-Harris Administration will continue working to ensure that Americans with Medicare have access to innovative, life-saving treatments at lower costs,” he said.

According to the White House, the law will make medication more affordable for up to 9 million older Americans who are currently paying up to $6,497 in out-of-pocket costs per year for these 10 prescriptions.

In addition, the nonpartisan Congressional Budget Office reports that the price adjustments will save taxpayers $160 billion by reducing how much Medicare pays for drugs through negotiation and inflation rebates, the administration said.

In an Aug. 29 statement, Biden said, “This plan is a key part of Bidenomics, my economic vision for growing the economy from the middle out and the bottom up – not the top down. And it’s working. That’s why Big Pharma has already filed eight lawsuits against my Administration and spent nearly $400 million last year to try to stop our progress. Let me be clear: I am not backing down. There is no reason why Americans should be forced to pay more than any developed nation for life-saving prescriptions just to pad Big Pharma’s pockets.”

“For many Americans, the cost of one drug is the difference between life and death, dignity and dependence, hope and fear. That is why we will continue the fight to lower health care costs – and we will not stop until we finish the job,” said the president.

Over the next four years, Medicare will negotiate prices for up to 60 drugs covered under Medicare Part D and Part B, and up to an additional 20 drugs every year after that.

Impeding progress?

Meanwhile, the pharmaceutical industry believes the program will curtail profits and ultimately compel drugmakers to scale back development of groundbreaking new treatments.

In weighing in on CMS’ announcement, BioNJ, the state’s life sciences trade association, expressed “serious and significant concerns” and a hope that policymakers “will consider more effective opportunities” to implement programs “that will truly lower the costs that patients face.”

“The government’s arbitrary, opaque and unpredictable process for deciding the price of medicines will drive research and investment away from potentially lifesaving treatment options for Medicare patients,” the organization said in a statement.

“The companies targeted by this policy account for a substantial proportion of all investment in R&D across the life sciences which will be severely diminished and undermined as a result,” BioNJ said.

Additionally, the group believes seniors “may not actually benefit” from the price setting and could instead see their access to medication restricted.

Several New Jersey pharma giants – including Johnson & Johnson in New Brunswick, Merck & Co. in Rahway and Bristol Myers Squibb in Lawrenceville – are among the entities that have taken legal action over the drug pricing requirements.

When asked whether it planned to negotiate, a spokesperson for Bristol Myers Squibb told NJBIZ, “We have no choice other than to sign the ‘agreement.’ If we did not sign, we’d be required to pay impossibly high penalties unless we withdraw all of our medicines from Medicare and Medicaid. That is not a real choice and we would never do that to patients.”

Bristol Myers Squibb noted that the inclusion of Eliquis “was widely expected given it is among the highest government expenditures in the Medicare program” and that it was targeted “due to the sheer number of Medicare patients who benefit from the medicine, not its price.”

“Medicare patients who are prescribed ELIQUIS are currently able to get it with relatively low out-of-pocket costs at an average of $55 per month. This reality is at risk, as the government has not required that insurance companies make selected medicines available in the future without burdensome cost sharing or hurdles to access,” the company said. “We remain driven by our commitment to patients and will continue to advocate for an environment that supports patient access and future innovation.”

Novo Nordisk, which has its U.S. headquarters in Plainsboro, said in a statement to NJBIZ that while it “supports policies to ensure patients can afford their medicines, including insulin,” the drugmaker has “unfortunately … seen CMS take aggressive steps to carry out unilateral price setting without consideration for the impact on patients living with chronic disease or the overall health care system.”

“We will explore all options that allow us to drive change for people that need it and strive to continue to bring innovative medicines to the market while helping increase access for those that need them. Given our products have been included in today’s list, we will be determining next steps toward addressing those important initiatives,” the company said.

A spokesperson for Novartis Pharmaceuticals in East Hanover said the drugmaker “believes the unconstitutional price-setting provisions in the Inflation Reduction Act (IRA) will limit the pharmaceutical industry’s ability to discover and develop new life-saving and meaningful medicines for the people who need them most.”

The media representative went on to say, “Novartis is particularly concerned that the IRA disincentivizes innovation and post-approval research, particularly for small molecule medicines including, among others, those that treat cancer, heart disease, and mental illness – diseases that affect millions of Americans.”

“More comprehensive changes are required to ensure the IRA’s drug price-setting provisions do not result in worse access for patients; that the law is implemented in the most transparent and patient-centric manner possible; that the process allows for meaningful stakeholder input; and that ongoing innovation is valued equally for small molecules and biologics,” the Novartis spokesperson added.

Over at Johnson & Johnson, the parent company of Janssen Pharmaceuticals, the health conglomerate offered a similar statement, saying, “The IRA’s price control provisions will constrain medical innovation, limit patient access and choice, and negatively impact overall quality of care.”

“The IRA’s policies put an artificial deadline on innovation, threatening intellectual property protections and shortening the timeframe to deepen our understanding of patients’ unmet medical needs,” J&J stated. “At the same time, seniors could face bureaucratic barriers to access and potentially higher out of pocket costs even with the IRA’s out-of-pocket cost limits for Part D drugs.”

Merck said it remains “focused on creating a more affordable and sustainable health care system that improves patients’ access to medicines and lowers out of pocket costs while still supporting biopharmaceutical innovation,” but believes the price-setting provisions “are bad policy that will stifle the U.S. biopharmaceutical sector’s research and development and have potentially devastating consequences for the millions of patients who need new therapeutic options.”

“While we do not believe that price setting is the right approach for continuing to advance global health on behalf of millions in need, Merck remains committed to working with the U.S. government to enable patient-focused innovation, value, and access,” the company stated.