This audio is automatically generated. feedback.
The Centers for Medicare & Medicaid Services is scheduled to publish new Medicare prices on Sept. 1 for the first 10 drugs selected for the first wave of negotiations, but pharmaceutical companies are already learning how the policy will affect their portfolios.
The negotiations formally concluded on August 1, but the drug prices won’t go into effect until 2026. The negotiations are part of the Anti-Inflation Act, which pharmaceutical companies have been trying to get rid of so far without success. Legal action Since the law was passed.
of The 10 drugs on the list The drugs, chosen based on Medicare Part D spending, range from cardiovascular drugs to diabetes and cancer drugs. J&J could be the drug company most affected in the first wave, but industry leaders have downplayed the impact of IRAs and did not disclose new prices on earnings calls. But other big drugmakers could be hurt by the next wave of drugs that CMS has not yet selected.
Here’s what pharma leaders said on their latest earnings calls about how the negotiations will impact their portfolios.
Medicine: Eliquis
Owner: Bristol-Myers Squibb and Pfizer
Eliquis is expected to reach $7.1 billion in revenue in the first half of 2024, and the blood-clotting blocker best selling drugs For BMS, the drug has generated $3.9 billion in revenue so far this year, according to the company’s second-quarter earnings report. Pfizer’s top earners Despite the potential impact to both companies’ revenues, BMS CEO Christopher Boehner remained bullish about the drug’s long-term success during the earnings call.
“Now that the final price is known, we are increasingly confident in our ability to navigate the impact of the IRA on Eliquis. Eliquis is an important medicine for patients,” Boehner said. “In the short to medium term, it will continue to be an important medicine for our company.”
While BMS may be able to weather the crisis, Boehner sharply criticized the IRA’s overall impact on the pharmaceutical industry.
“We continue to believe that arbitrary government pricing of life-saving medicines is not good public policy,” he said. “So regardless of short-term trends, we remain very concerned about the long-term impact of the IRA on innovation.”
The BMS chief also said the company has other products due to launch this year in its pipeline that could plug revenue gaps, including a potential blockbuster drug for schizophrenia. Cal XT.
Medicine: Jardiance
Owner: Eli Lilly
Jardiance is a big seller for Eli Lilly, which has no generic competition, and the company said it makes about $1.2 billion from the drug. $1.5 billion Sales in the first half of this year were up from $1.2 billion last year.
CEO David Ricks is opposed to price negotiations and the law Harmful to innovation New drug development, particularly focusing on small molecule drugs.
“I’m really concerned about the negative impact this will have on new medical treatments and possibilities,” Ricks told CNBC last year.
Drug: Xarelto
Owner: Bayer and J&J
Another blood thinner on the list, Xarelto, is already hurting Bayer’s bottom line. Sales down 11% In its latest earnings report, the company said its second-quarter sales were down 9% compared with the same period a year ago. The decline was mainly due to pressure from generic drugs; excluding Xarelto from revenue, Bayer’s overall sales for the quarter increased 9%.
J&J is $1.1 billion The company said sales of Xarelto in the first half of the year were down compared with the same period last year, but it would not disclose the final price agreed with the government. The company said the impact was priced in and doubled its guidance.
“While we have not externally quantified the impact at this time, we expect a net negative impact in 2025,” Innovative Medicines Worldwide Chairman Jennifer Taubert said in the company’s earnings call. “We expect our business to grow more than 3% next year and 5% to 7% through 2030.”
Medication: Januvia
Owner: Merck & Co.
Merck’s diabetes drugs are not the company’s best-sellers, and the pharmaceutical giant’s sales are already declining. $823 million Sales in the first half of this year were down from about $1.1 billion in the same period last year, and the company blamed the decline on pricing, demand and generic competition.
During a recent earnings call with investors, Merck executives were not asked about the impact of the IRA on Merck or Januvia. But Merck first The pharmaceutical company Merck sued the Department of Health and Human Services over the IRA’s drug price negotiation provisions. In its complaint, Merck described the law as “Blackmail.”
Drug: Farciga
Owner: AstraZeneca
AstraZeneca has also gone to court to challenge the price negotiations, but has so far been unsuccessful as judges have ruled in favor of HHS. Revenue from diabetes drug Farxiga to grow 35% in the first half of 2024 $3.8 billionThe decision comes as the company is seeking to appeal the IRA’s decision to block the sale of the drug, which it said was intended to treat chronic kidney disease and heart failure.
CEO Pascal Soriot said AZ plans to invest more in biologics than small molecules going forward. The change is due to the IRA, which allows small molecules to be negotiated with Medicare four years earlier than biologics. But AZ isn’t ready to shut down its small molecule business.
Medicine: Entrest
Owner: Novartis
Novartis’ heart failure drug Entresto is currently facing a generic version due to arrive in 2025. Entresto sales in the first half of this year were $3.8 billionThe company plans to use litigation to block generic competition until then, and its executives have strongly opposed the IRA’s outsized impact on the company and the pharmaceutical industry as a whole.
“While in the short term this may be manageable with our first set of medicines, in the long term this path is really bad for innovation and bad for American patients,” Novartis CEO Vasant Narasimhan said on the company’s earnings call. “And if companies are responding, they’re responding by pivoting away from small molecules.”
Narasimhan said the company has already factored the impact of the IRA into its guidance through 2030, but declined to comment on the final price ahead of the Sept. 1 publication date.
“There is no merit in disclosing anything publicly as we continue to finalize discussions and move forward from there,” the CEO said.
In this case, the drugs chosen are already close to losing exclusivity, meaning they have already taken a hit to revenue from generics, he said.
Drug: Enbrel
Owner: Amgen
Amgen had a tough second quarter this year, reporting a 46% drop in earnings per share due to rising expenses, despite a 20% increase in sales. Sales of its autoimmune biologic Enbrel fell 15% year over year to $909 million, nearly double the company’s sales in the first quarter of 2019. $1.5 billion Sales rose 1.5% year-over-year to $1.22 billion in the first half. The drug is one of Amgen’s best-selling products, and the company said the sales decline was due to lower net selling prices. Medicare pricing in 2026 “will have a negative impact on profitability,” the company said in the report.
But it’s not all bad news for Amgen, since only a small portion of the company’s Enbrel sales come from Medicare, Murdo Gordon, executive vice president of global commercial operations at Amgen, said on the company’s earnings conference call.
“The process with CMS is complete,” Gordon said, “and the price is set. Remember, about 25% of Enbrel’s revenue comes from Medicare Part D, so that will cushion the impact of any price cuts by CMS to some extent.”
Drug: Ibrubic
Owner: J&J and AbbVie
Sales of cancer drug Imbruvica reach record high $1.6 billion Revenue for the first half of 2024 is expected to decline 6.4% compared to the first half of 2023. During the quarterly earnings conference call, executives attributed the decline primarily to increased competition.
AbbVie executives said the impact of IRAs is factored into their guidance, but they also foresee long-term damage from the health care law to the pharmaceutical industry and see the upcoming U.S. election as an opportunity for change.
“We have announced that we are able to achieve our long-term outlook even as we model the impact,” AbbVie CEO Robert Michael said in the earnings call. “The IRA pricing provisions will certainly have a negative impact on long-term innovation in our industry, and we therefore expect to see a reevaluation of these provisions, which will ultimately have a negative impact on long-term patient care in the U.S.”
Drug: Stelara
Owner: J&J
Stelara, a blockbuster immunosuppressant, is J&J’s best-selling immunology drug, with sales reaching $5.3 billion in the first half of 2024. But Stelara is expected to face competition from biosimilars in the second half of the year, and J&J is hoping that Tremfya, a monoclonal antibody currently approved to treat plaque psoriasis vulgaris, will fill the gap. But the pharmaceutical giant is also Submitted The drug was approved for the treatment of inflammatory bowel disease, which is where roughly 75% of Stelara’s sales currently come from, and CEO Joaquin Duato said the deal represents a “meaningful opportunity” for the company to recoup some of the Stelara revenue it will lose to future biosimilars and IRAs.
Pharmaceuticals: Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill
Owner: Novo Nordisk
Novo Nordisk has grown rapidly thanks to the success of its diabetes and weight-loss drugs Ozempic and Wegovy, while out-of-pocket costs for insulin for Medicare beneficiaries are already capped at $35 a month.
In its earnings call, Novo reported sales of 1.1 billion Danish kroner ($160 million) for Fiasp in the first half of 2024. Compared with Ozempic’s $8.3 billion in revenue, Fiasp represents a pittance for the Danish pharmaceutical giant, and executives downplayed the impact of the IRA on the earnings call.
“I can’t comment on pricing, but we have completed initial negotiations with NovoLog and Fiasp,” Doug Langa, executive vice president of North American operations, said on a conference call. “As you know, this is only a small part of our business.”
Langa also said it was “too early” to know whether the semaglutide product might be placed on the negotiation list in the future.
