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Ten more thoughts on yesterday’s unveiling of the first 10 government-set prices under the IRA.
I have a huge amount of sympathy for the Biden administration folks tasked with trying to explain yesterday’s numbers in a way that was brief and fair, given the constraints (notably the lack of public net price information). It was an impossible task, and — indeed — later-in-the-day coverage had an edge of skepticism. STAT said “The numbers it’s using don’t actually mean much,” and Endpoints noted that the key figures the administration was touting “can’t be verified.” AP: “Details on those calculations, however, have not been released.”
A lot of smart people spent a lot of yesterday trying to answer a fairly basic question: “Did the government get a good deal?” I still don’t have a confident answer to that question. But there’s a lot of great efforts underway. I flagged Ben Rome’s analysis yesterday as a good starting point. An effort from ATI Advisory, which (I think) may have used some of the same SSR data as Rome, is also worth checking out. Kevin Pierce from Milliman also had a LinkedIn post trying to reverse-engineer the impact. And UCSD’s Inma Hernandez dropped her new paper that sought to predict how CMS would set prices. (She did a pretty good job, and both the hits and the misses were instructive.)
The other unanswered question from yesterday is “How did CMS arrive at these specific prices?” (Anirban Basu from the University of Washington posed these well yesterday.) There’s no firm answer to that question, though the government will have to present some of its rationale by March. Sara Emond from ICER looked at the “negotiated” prices for Eliquis and Xarelto and noted that they lined up with her group’s suggested value-driven price. I suppose that’s evidence — but circumstantial evidence — of a value bent to CMS’ thinking.
The Wall Street consensus is that there were no surprises. I’m repeating myself, but that doesn’t mean there are no impacts, only that the impacts align with what investors and companies have prepared for. Wall Street hates volatility and unknowns almost as much as it hates actual bad news, and yesterday didn’t surface anything that would amp up volatility or unknowns.
That said, the Wall Street Journal’s David Wainer penned a Heard on the Street column in which he makes the point that just because this round wasn’t pharma’s Waterloo doesn’t mean that the skies are blue for manufacturers. “The government has now given itself the power to reduce the prices of blockbuster drugs and there is no telling whether it will always play nice.” So, yeah, no one is sleeping soundly.
There was some creeping discussion of just how this will be implemented, and how CMS plans to keep PBM shenanigans at bay. Endpoints touched on this, noting a BMS statement that the law “does not protect patients from potential increases to their cost sharing or restrictions in access” and quoting an HHS official pledging to “lean on their formulary review process” to keep gamesmanship at bay. That’s a lot of prices to review. I’m not holding my breath.
BTW: two-thirds of you guessed the wrong week for CMS’ big announcement. Congrats to the minority who pegged it right.
A quick wrap of notable comments: PhRMA weighed in here. NPC’s thinking is here. This is BIO’s statement. Here’s how the PBM lobby framed it. And here’s AARP.
The dog that didn’t bark: there wasn’t a lot of discussion about the impact of the IRA on innovation, even with some top-level numbers now public. If you believe the administration, $6 billion just moved from the pharmaceutical side of the ledger to the government’s accounts. Some of that money would have otherwise been earmarked for R&D. And yet that element of the story kind of disappeared yesterday.
So what’s next? Kamala Harris is unveiling her economic plan today, which includes some handwaving in the direction of expanding the IRA (though apparently without specifics) along with support for efforts to expand $35 insulin and the $2,000 copay cap to commercial markets. The former might be possible, if only because insulin is so cheap now as to make that virtually meaningless. The latter is a non-starter for practical reasons that are probably obvious to you all. But I’m sure it polls great.
Yeah, other stuff has been happening:
Novo Nordisk appealed their IRA case to the Third Circuit. I feel like the conventional wisdom is that all of these lawsuits are just so much kabuki theater, but part of Novo’s argument — the part about single-source drugs — remains fascinating to me, and this might be one of the appeals cases worth watching more closely.
Interesting STAT story on how the Medicare benefit design means that a lot of patients who self-inject arthritis drugs (covered under Part D) switch to infused medicines (Part B) when they hit Medicare age. Benefit design matters, folks!
I mentioned this when I talked about Mark Cuban’s Daily Show hit, but here is Becker’s on the Cuban plan to make public all his company’s contracts.
Health Affairs has a new paper by AEI’s Ben Ippolito and Hopkins’ Joseph Levy on the cost of covering obesity meds for “newly eligible” Medicare patients. Their conclusion: if 5% of new patients to Medicare had an anti-obesity script, the cost would be about $3.1 billion (or $6.1 billion in 10% of beneficiaries are on med when they hit Medicare age). But the paper acknowledges that’s a conservative upper bound that doesn’t account for competition or the possibility that uptake will be slower. And they’re using a net price that almost certainly too high, given how that space has evolved.
A couple new drug approval price disclosures. Gilead’s liver disease med Livdelzi will run $151,000 a year. Incyte/Syndax’s Niktimvo also got the green light, but they won’t release price until closer to launch.
Header image by Adrian Curiel on Unsplash
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