Industry awaits names of 10 drugs subject to federal price negotiation

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On or before September 1, the Centers for Medicare and Medicaid Services will release the names of the 10 Part D drugs subject to negotiated prices in Medicare starting in 2026.

This the first time the federal government is negotiating drug prices with pharmaceutical manufacturers, a move PhRMA and other opponents say should be more accurately called mandatory price controls. 

The move is being allowed under the Inflation Reduction Act, which was signed into law on August 16, 2022.

The list is expected to drop any day, but no later than September 1, according to John Stanford, executive director of Incubate, a coalition of early-stage life science investors. 

"We thought it might be on the anniversary of the IRA," Stanford said.

Which 10 of the top 50 in revenue Part D drugs will be on the list is not known, though pharma companies in court filings said they expect four of their blockbuster medications to be targeted, according to CNBC.

These include, according to the report: Type 2 diabetes drug Januvia; blood thinners Eliquis and Xarelto; and blood cancer drug Imbruvica. The report mentioned other drugs named by the Journal of Managed Care and Specialty Pharmacy: Jardiance, used to treat heart failure; Enbrel, for rheumatoid arthritis; Symbicort, for asthma; Ibrance, for breast cancer treatment; Xtandi, for prostate cancer; and Breo Ellipta, to manage pulmonary disease.

WHY THIS MATTERS

Whatever drugs are on the list, the IRA and subsequent action by the Department of Health and Human Services are already limiting investment in drugs that are manufactured in pill form, according to Stanford.

Incubate is in the camp of being against the CMS drug negotiation process, at least as it stands.

"Our voice is in venture capital," Stanford said. Price controls, he said, are an "anathema to investment."

While not part of the lawsuit filed by PhRMA and others in June, Incubate is lobbying Congress to get more favorable conditions for the pharmaceutical industry. But most lawmakers are taking a wait-and-see approach, Stanford said.

Companies make their investments 10 years in advance, he said.

"There's damning consequences, not in 10 years, but now," Stanford said. 

The reason is HHS has set a timeline for when new drugs become subject to negotiation.

There's two types of drugs, large molecules, more commonly called biologics, such as Humira which are given by infusion, and small molecules, which are manufactured in pill form. 

Biologics are subject to a maximum fair price in year 13. 

"But really devastating is the cut to small molecules, which is down to nine years," Stanford said. 

Generally a patent term is for 20 years. The cut to nine years, he said, "is hugely upsetting."

"We're seeing a shift away from small molecules," Stanford said. "We're working on legislation to give both 13 years. We have to make it a popular bipartisan fix."

The small molecule exception is for the development of drugs for diseases that affect those younger than Medicare age, as that cost would be paid by the commercial market.

"It's now inserting Washington and incentives by Washington in the drug development cycle," Stanford said. "For all of us, this is a flawed way to think about the healthcare system."

Most people have access to pills, he said, but in rural America, it's harder to get to the nearest hospital to be infused with a biologic.

"If you're a hospital, you'd better be making room for people to come in the doors," Stanford said. 

THE LARGER TREND

In March, CMS released guidance for the Part D price negotiation program and in June released revised guidance.

PhRMA, the National Infusion Center Association and the Global Colon Cancer Association filed a lawsuit against HHS in the Western District of Texas on June 21, calling the Drug Price Negotiation Program unconstitutional.

"The cost of developing such groundbreaking drugs is stunning," the lawsuit said. "On average, a manufacturer will spend nearly $3 billion developing one new medicine."

Since the IRA became law, HHS has introduced several initiatives to lower drug prices, such as capping the cost of insulin at $35 a month. 

In June, the Centers for Medicare and Medicaid Services released a list of 43 prescription drugs for which Medicare Part B beneficiaries' coinsurances may be lower due to the stipulation that manufacturers pay a rebate to Medicare if a drug's price increase exceeds the rate of inflation.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org