If you want to search Cost Curve back issues or link to anything you read here, the web links and archive are online at costcurve.beehiiv.com. You can subscribe there, too.
Some things I’m thinking about as we wait for CMS to reveal the specifics on IRA price controls:
First off, I was fast and loose with my math yesterday about the “negotiated” price that would allow a medicine to hit the $2,000 out-of-pocket cap exactly. This is the number above which the price would have zero impact on any beneficiary. I pegged it at $470 a month. Shionogi’s Ken Scapicchio corrected me: the actual number is about $519.
Second, there is less preview coverage than I expected, and no one seems to have matched Politico’s reporting calling tomorrow as the day when the announcement will come. Axios has a piece today, though I’m not sure there’s anything there that we haven’t already touched on. Manatt has a preview, too, that is worth reading mostly for the possibility that the White House rolls up other drug-pricing elements (e.g. march-in) into the announcement. And Adam Fein has a one-slide cheat sheet worth checking out. And there was a nice webinar yesterday from the Partnership to Advance Cardiovascular Health with a replay that you might want to watch.
Third, the Axios article included this line: “Drugmakers have indicated that the negotiated prices for this first 10 drugs won’t have much impact on their projected bottom lines.” I’ve said it before, and I’ll remind everyone again: that’s not remotely true. Wall Street analysts are expecting companies to take a hit. They’ve just baked it into their expectations.
Fourth, I posted yesterday’s newsletter to LinkedIn, where I got some pushback from academics who wanted to ding me for being hyperfocused on the experience of beneficiaries on the selected drugs, rather than pulling back and looking at the whole picture. That argument: from 30,000 feet, the price controls are simply a way to pay for the $2,000 copay cap, which is the real patient benefit, and my effort to point out that “negotiated” prices won’t necessarily help patients is to miss that broader context. But … while that’s true, I doubt that will be how tomorrow’s announcement will be sold by the Biden/Harris administration.
Fifth, a quick reminder that price controls will have some impact on innovation. The degree of that impact is — and will always be — a topic of some debate, but if you want a list of shelved programs where the IRA has played some role, Incubate has you covered.
Sixth, here is some relevant Cost Curve content from the past few months that might be helpful perspective ahead of the big unveiling:
My post yesterday on whether seniors will save directly from negotiations remains salient.
There’s likely to be some chatter on the way that the IRA will drive up OOPs for certain patients. I tried to break down the math here.
Back in February, I tried to draw a distinction between price controls that would be a victory for the government, and price controls that would be a win (or at least a missed bullet) for industry, suggesting that the government doesn’t need to be maximally punitive to take the dub.
The impact of price controls on 340B is probably an undercovered element of the IRA.
If you’re already on to the next thing, here is how the next 15 medicines to get price controls might shake out.
Otsuka said it will launch its new, fully-FDA-approved digital therapeutic to patients for $50 (it will charge insurers $200). The digital tool, Rejoyn, is used for major depressive disorder. The company told STAT that “we’re probably going to lose a lot of money on this.”
And that seems likely, given the failure of other, similar efforts.
The whole space is an object lesson on what happens with when payers refuse to cover an effective (and cost-effective) intervention: companies can’t recoup costs, and a whole sector is smothered before its potential can be realized.
Bernie Sanders is still on his mission to get $35 out-of-pocket caps for all inhalers, turning his ire toward GSK and Prasco, which makes the authorized generic for Flovent. (GSK took the brand name version off the market.) I have zero idea what the endgame is here for either side.
There is a small exception in the 340B rules that makes 340B pricing voluntary when shipping orphan drugs to four specific kinds of providers (referral centers, sole community hospitals, critical access hospitals, and free-standing cancer hospitals). AbbVie has invoked that exception and won’t provide 340B pricing on ophan drugs (including Humira, Rinvoq, etc.) to those providers. 340B Report has the details.
Mark Cuban sat down with Jon Stewart at The Daily Show to talk about basketball, Trump, AI, and … PBMs. The pharma talk was mostly Cuban’s usual stump speech, but my ears perked up when he said he plans on making the contracts his company signs public. I’ve spent some time over the past couple of months unsuccessful filing public records requests for health-industry contracts, and, boy, transparency is not the default around here.
Thanks for reading this far. I’m always flattered when folks share all or part of Cost Curve. All I ask is for a mention or tag. Bonus points if you can direct someone to the subscription page.
