ANALYSIS: Drugmakers Mostly Guess Right in Medicare Price Fights

Almost all of the drugmakers challenging the landmark Inflation Reduction Act in court guessed right when they said their product would be picked first for historic price negotiation with Medicare.

The 10 selected drugs, announced Aug. 29, are Bristol-Myers Squibb Co.‘s Eliquis, Eli Lilly & Co. and Boehringer Ingelheim’s Jardiance, Johnson & Johnson’s Xarelto, Merck & Co. Inc.‘s Januvia, AstraZeneca’s Farxiga, Novartis’s Entresto, Amgen’s Enbrel, AbbVie and J&J’s Imbruvica, J&J’s Stelara, and Novo Nordisk’s NovoLog.

The Centers for Medicare & Medicaid Services will send each company a proposed maximum fair price by Feb. 1, 2024. Negotiations will take place until August 2024, and the negotiated prices will take effect in 2026.

That’s assuming none of the companies succeed at blocking the drug pricing provisions and stopping the first round of negotiations from happening. The drugmakers can opt out of negotiating, but that would require withdrawing their products from Medicare and Medicaid.

So far, Bristol-Myers, Merck, J&J, Boehringer, AstraZeneca, and Astellas Pharma have separately filed lawsuits against the IRA’s drug pricing provisions. Five of these six were right on the money.

For example, Boehringer said in its complaint that “the Act and applicable guidance make clear that CMS will select” Jardiance for negotiations. Merck said that Januvia “is expected to be subject to the IRA’s scheme starting in 2023.”

Of the six, only Astellas missed the mark and is safe from negotiations, at least for now.

Because Astellas’s prostate cancer drug Xtandi “is among the ten most reimbursed drugs within Medicare Part D, it will be included in the Program,” Astellas said in its complaint.

It seems likely that Astellas’s lawsuit will fall out of the running for lack of standing. Its complaint is the only lawsuit so far that would go to the Seventh Circuit on appeal.

The eight existing challenges (which include lawsuits brought by the US Chamber of Commerce and the Pharmaceutical Research and Manufacturers of America) are spread across six circuits and allege a handful of constitutional claims, including those based on the First and Fifth amendments. Any circuit split gives the case a good chance of ending up before the US Supreme Court.

Meanwhile, other drugmakers targeted in the Aug. 29 announcement have yet to file suit: Eli Lilly, Novartis, Amgen, AbbVie, and Novo Nordisk. Any of those five companies may be next to bring CMS to court.

Bloomberg Law subscribers can find related content in our new In Focus: Drug Pricing page, which launches today, Aug. 30.

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