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Will Big Pharma engage in Medicare price negotiations? Merck, AZ and BMS say they will

October 1, 2023
Life sciences

After the Centers for Medicare & Medicaid Services (CMS) revealed the list of drugs set to face the first round of price negotiations under the Inflation Reduction Act (IRA), the drugmakers responsible for marketing them are confronting a series of deadlines.

First up, the companies need to tell CMS by Sunday whether they’ll participate in the process or exit the Medicare and Medicaid programs entirely. Companies that plan to participate must sign agreements stating as much by Sunday, according to the CMS.

In a statement to Fierce Pharma, an AstraZeneca representative said the company plans to “participate in the process outlined by CMS to communicate the value of Farxiga to people covered by Medicare” as part of its commitment to ensuring access.

Bristol Myers Squibb plans to begrudgingly participate in the process, a spokesperson said in an emailed statement.

“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,” the spokesperson said. “That is not a real choice.”

Merck also plans to sign the CMS’ initial agreement “under protest,” a spokesperson said.

The New Jersey-based drugmaker has “legal and policy” problems with the program, according to its statement.

Still, Merck said “withdrawing all of the company’s products from Medicare and Medicaid would have devastating consequences for the millions of Americans who rely on our innovative medicines, and it is not tenable for any manufacturer to abandon nearly half of the U.S. prescription drug market.”

Boehringer Ingelheim, which handles pricing and access for Jardiance under its partnership with Eli Lilly, plans to enter the talks as well, Bloomberg Law reports.

Aside from those companies, Johnson & Johnson, Novartis, Novo Nordisk and Amgen face the first round of CMS price negotiations.

A spokesperson for Novo Nordisk said the company will “continue to explore all options that allow us to drive change” for people who need its medicines.

Amgen declined to comment, while J&J and Novartis didn’t immediately reply to Fierce Pharma’s requests for comment.

After companies opt in to the talks by Sunday’s deadline, they must also submit any data they want to be considered in the talks by Monday.

In addition, members of the public can submit information about therapeutic alternatives to the 10 drugs on CMS’ list.

Throughout the fall, companies will meet with the CMS to discuss their therapies. After that comes patient-focused listening sessions, which will be held between October 30 and November 15.

By February 1, CMS will send out an initial pricing proposal for each of the drugs. Companies can send their counterarguments up to 30 days after that.

Then, each company gets up to three negotiation meetings before the talks end on August 1, 2024. The new prices will take effect in 2026.

Companies that refuse to negotiate their prices face a sizable excise tax, a major point lamented in the several lawsuits aimed at the program.

As the negotiation process proceeds, so too does the litigation surrounding the law. Most of the companies facing price negotiations on their lucrative therapies have sued the government, alleging violations of their constitutional rights.

“The choice between doing so and weathering the IRA’s massive fines and taxes is no choice at all,” Merck said in a statement. “As we enter this next phase with the government, we remain focused on challenging the constitutionality of the statute in our ongoing litigation.”

By Zoey Becker


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