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Big drugmakers are on the hook for the biggest price hikes on record, and the industry expects to receive a bill from the government later this year to cover penalties for raising drug prices faster than inflation.
Drug companies are required to pay an inflation penalty to Medicare if the price of a prescription drug rises faster than the inflation rate for a particular drug. The mandate is part of the Contain Inflation Act, and the latest penalties announced in June include: 64 types of medicineSome of them come from big pharmaceutical companies.
Treatment list does not overlap with the first one 10 types of medicine These are subject to price negotiations with Medicare, a separate provision for IRAs. These price adjustments are currently being negotiated and are expected to take effect in 2026.
The inflation-related rebate is based on the average selling price, and if prices rise faster than the rate of inflation, drug companies are required to pay Medicare the difference equal to the quantity sold to Medicare. The rebate is deposited in the Medicare Trust Fund, and people with government-run insurance plans will receive a temporary reduction in their coinsurance premiums to make up the price difference. From July 1 to September 30, Medicare enrollees will receive up to $4,593 in savings per day on some drugs, according to CMS.
The rebate program began last year when Medicare mandated payment for 46 drugs. The latest program includes some of Big Pharma’s blockbuster drugs. Drugmakers are also working to negotiate prices, but the rebate list that big pharma must consider includes three cancer drugs.
Abekuma, Breyanji —Bristol Myers Squibb
CAR T-cell therapy Abekuma has yet to achieve blockbuster status for Bristol-Myers Squibb and partner 2seventy bio since it was approved in 2021 to treat multiple myeloma. Revenue: $388 million Sales are expected to reach $358 million in 2022, before declining thereafter due to increased CAR-T competition, falling to $358 million in 2023.
Still, as 2seventy bio reports, Abecma has growth potential. A new strategic path At the beginning of the year, we focused on merchandising, including expanding the label.
The penalty list also includes BMS’ Breyanzi, a CD19-targeted CAR-T cell therapy approved for B-cell lymphoma. Revenues are expected to grow from $182 million in 2022 to $303 million in 2023. The company won U.S. approval for follicular lymphoma and mantle cell lymphoma this year, and sales are expected to increase in the coming years. Breyanzi revenues for the first half of this year were 52% increase.
The inflation penalty isn’t the only government effort to affect BMS’s drug prices. The company is also under pressure from IRA price negotiations with its blockbuster blood thinner Eliquis, which it developed with Pfizer, among its 10 drugs. $12.2 billion BMS’s year-end financial results show sales of $2 billion in 2023. But with price negotiations nearly finalized, the company remains bullish on the drug’s short- and medium-term value, executives said.
Adcetris — Pfizer
Adcetris was Pfizer’s top-selling drug when it acquired SeeGen late last year for $43 billion. Sales were $279 million In the second quarter of 2024, Pfizer said in its earnings report this week: $257 million In the first quarter.
As a result of being placed on the CMS Inflation Penalty List, the inflation-adjusted coinsurance rate for ADCETRIS, an antibody-drug conjugate for Hodgkin lymphoma, will drop from 20% 18.6%This will temporarily reduce recipients’ out-of-pocket costs, the agency said.
Despite the fine for Adcetris, Pfizer CEO Albert Bourla noted that the IRA isn’t all bad news for the company because of potential increased volumes of the vaccine related to cost-sharing with Medicare beneficiaries.
Padchev —Pfizer, Astellas Pharma
CMS blamed Pfizer and Astellas for exorbitant price increases for their bladder cancer drug Padcev, which has risen in price above the rate of inflation every quarter since the Part B rebate system went into effect. As a result, CMS is adjusting coinsurance rates starting in 2023 to keep Medicare beneficiaries’ share of the price increases low.
“Beneficiaries who take Padosev as part of their cancer treatment could potentially save up to $1,181 between April 1, 2023 and March 31, 2024, depending on coverage and course of treatment,” CMS said in a press release.
Along with Adcetris, Padsev is another drug that Pfizer acquired in 2000. Siegen Trading To strengthen its oncology portfolio. In Q2 2024, Padcev’s revenues are $394 millionAccording to the company’s earnings report released this week, revenue was Better than expected Reuters reported that the results beat analysts’ expectations, helping Pfizer raise its full-year sales outlook to $62.5 billion from $59.5 billion.
