Programming note: Cost Curve is off tomorrow, back Monday.
There are a couple of overlapping milestones this week.
First off, Monday was the deadline by which CMS was supposed to provide its prices for the first 10 medicines to get price-controlled.
Second, it’s the start of the 2Q24 earning season, with Johnson & Johnson kicking things off yesterday and Novartis announcing results today. Both companies have medicines on the CMS list. So, naturally, the topic of the IRA came up. I’d love to paraphrase, but it might be more useful to give you the verbatims, even if lengthy.
Here’s J&J:
“In terms of IRA and kind of what’s been going on, if we take a look at Part D redesign, while we’re not externally quantifying the impact at this time, what we can say is that we do anticipate a net unfavorable impact in 2025. … These numbers are actually already included in that guidance that we provided.
Same thing as it pertains to the government pricing process, we are still in that. We have received the final numbers from the government, we’re not disclosing that at this time. That will be disclosed in the September time frame. And while we are not in alignment with IRA and the price setting process, those numbers have been included in the guidance that we provided last year at EBR, that still looks very good to us today.
And here’s Novartis, which went even deeper:
So first, we’d say it’s not a negotiation, it’s government price setting. It’s not a situation where companies have the opportunity to, in effect walk away from the prices that are set by government.
I’d also say, while in the short term, this might be manageable on our first set of drugs, in the long run, this policy is really not good for innovation, good for patients in the United States. And companies are managing, it’s managing by shifting away from small-molecule medicines for other therapies and neurological diseases maybe that can only be treated by small molecules.
So I think it’s very important to say, the policy is not a good one. It’s bad for American patients, bad for innovation and sincerely hope that it gets corrected. Now in terms of our midterm guidance, we factored in and our mid single digit guidance into the 2030s. We factored in IRA. And so we manage it through a combination of the kinds of medicines we develop, the indication creation go after, etcetera. And that’s how we’re approaching it. Can’t comment on the current price settings approach that CMS is taking right now. Those prices will obviously come out in for Entresto in September.
But I think right now, our focus is very much still to shift the policy. There are a few bills in play. There is a bill that is currently being discussed to … correct genetically targeted therapies, bipartisan support has passed through multiple committees. So we continue to be hopeful that ASOs, siRNAs, and related technologies will move from 9 to 13.
Another bill that is being discussed is within the rare disease framework to move off of a single rare disease to multiple rare disease drugs to have the same benefits if you’re in a single rare disease. So if you take a case study like Scemblix, our ability to develop Scemblix beyond CML and another rare cancer is limited because of the IRA’s policy. And maybe it would make sense to actually develop it in another cancer type, but difficult to do given the IRA policy. So I think that’s a second bill out there.
And then third, there’s the full correction of 9 to 13. So I think when I’m on the Hill, I have good conversations. I think there’s a broad recognition that there needs to be something done because this is an unintended consequence of poorly drafted legislation.
But how that actually transpires given that we’re in a political cycle, I think we’ll have to see in 2025 and beyond.
Vas Narasimhan, Novartis CEO
So the upshot of all of this seems to be: yes, companies have prices in hand; no, they’re not going to reveal them; no, they don’t seem to be meaningfully worse than expected; and yes, the IRA — particularly in the long-term — is still an issue.
It’s always worth looking at the data generated by Adam Fein and the Drug Channels Institutes, and his latest estimate of the gross-to-net bubble is no exception. But what may be even more valuable is Adam’s take on why — for the first time in ages — that bubble may begin to shrink.
GoodRx is going to make a Humira biosimilar — Boehringer Ingelheim’s Cyltezo — available for a cash-pay price of $550. That’s a tick lower than the $584 that Mark Cuban charges for the Yusimry biosimilar. One of the frustrating realities of the Humira biosimilar market is that these kinds of ever-lower prices don’t seem to be driving uptake, but it’s hard to argue that more low-price options aren’t a good thing.
Axios Pro tries to guess what Donald Trump will do around health policy, but the piece doesn’t seem to have much more than guesswork when it comes to drug pricing (which it says will be a priority for Trump). The assumption is that “most-favored nation” is back on the table. Beyond that, it’s pretty much ¯_(ツ)_/¯.
The USC Schaeffer Center folks always do a nice job of explaining what’s going on in the world of health policy, so this PBM-focused Q-and-A with the center’s co-director, Erin Trish, is worth a read.
Small PBM Navitus is out with its “drug trends” report, which shows that spending is up, driven in part by GLP-1s. But it doesn’t have a lot of details on the pricing trend, so it’s hard to make sweeping pronouncements.
STAT has a lengthy interview with new BIO CEO John Crowley. There’s not much health policy in there, to be honest, but good to keep an eye on what the head of BIO is thinking (and what the media are focused on, too).
I have zero idea how effective state and local lawsuits against PBMs are, but they make for fairly compelling reading. Here’s the one out of Vermont this week that tries to connect the dots between PBM behavior and consumer impact. If any of you legal eagles have a perspective here, hit me up.
Speaking of lawsuits, Merck has a new filing in its case, which has kind of stalled out. Merck’s not super-happy about that, politely asking the judge to maybe hustle up a little.
Header image via Etactics Inc on Unsplash
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