Drug Industry Lawyers, Experts Helped Shape US Drug Price Cuts

A list of pharmaceutical representatives at the table when the Biden administration negotiated Medicare drug prices reveals how manufacturers defended their medicines before agreeing to lower drug prices.

Justifications from the Centers for Medicare & Medicaid Services released ahead of a March deadline describing how the agency determined the prices of some of the most expensive and widely used drugs covered under Medicare unveiled who was at the front lines in a negotiation process largely held behind closed doors.

Meeting minutes disclosed that government and manufacturer attendees ranged from general counsel and policy heads to experts on global pricing and market access—shedding light on how the CMS approached the first round of its historic program and how deeply manufacturers allowed the agency to slash their prices.

“You can often sense how a company wants to approach a particular engagement by who they bring,” said Sarah Emond, chief executive officer of the Institute for Clinical and Economic Review. “If they’re bringing their counsel and commercial team, they’re trained to have a certain bent, which is how to think about market access, how to think about price negotiation, how to think about revenue.”

“If you bring your head of R&D and head of health economics and outcomes research, you might be sending a different signal that you want to be talking about the data and the real-world evidence that you’ve produced.”

The agency touted billions of dollars in savings from lowered prices released in August 2024, which featured cuts ranging from 38% to 79% off of the drugs’ list prices. Some industry watchers, however, are skeptical of the extent of savings, as the figures are offset by various factors.

Market Access, Legal Focus

The CMS revealed it held three meetings with manufacturers from April through June 2024. The agency sent six participants to each meeting, including directors from its Medicare Drug Rebate and Negotiations Group and general counsel from the US Department of Health and Human Services.

Manufacturer attendees ranged from three to six participants in each meeting, involving various company leaders, signaling how the manufacturer viewed its drug.

All drugmakers sent an expert on US policy and government affairs, who is likely familiar with the Inflation Reduction Act and program guidance documents. The industry also sent leaders focused on global pricing and health systems analytics; health economics and outcomes research; and clinical value and access.

“That is what I would expect for a negotiation, to see representation of the commercial side of the business, rather than purely legal or government affairs,” said Anna Kaltenboeck, a principal at ATI Advisory.

Manufacturers also sent leaders that represented their concerns with the program.

AstraZeneca PLC, for example, defending its diabetes drug Farxiga, sent contract operations and portfolio strategy experts. The move supports the company’s lawsuit against the program, which doesn’t challenge the selection of Farxiga, but rather the program’s implementation and how that affects the development of future medicines.

Novartis AG, representing its heart failure drug Entresto, sent leaders mainly focused on market access. The company said in a statement that it still believes the program will have “consequences for patients by limiting access to medicines.”

Merck & Co., AbbVie Inc., and Boehringer Ingelheim redacted their participant name and titles, signaling the information as confidential.

A Merck spokesperson confirmed that revealing such details reflected the company’s confidential and proprietary decisions about the data and information presented to the CMS.

Novo Nordisk A/S listed its attendees, but not their titles. Bloomberg Law found participants included general counsel, public affairs, a medical director, a strategic business leader, and head of policy.

The government and drugmakers also “lawyered up” at meetings, “showing the importance of the litigation subtext throughout the process,” said William Sarraille, a regulatory consultant and retired health-care member at Sidley Austin LLP.

Drugmakers have been battling the CMS in court over whether the program is constitutional and lawfully implemented.

Manufacturers so far have been unsuccessful in litigation. However, a drug industry group secured a partial win when a federal court in Texas agreed they have a case against the government’s plan.

“There’s no scenario where they’re not bringing counsel,” Emond said. “These companies are big, and you have individuals that might have diametrically opposed views of something like drug price negotiations.”

Different Discussions

The agency revealed topics discussed, which likely drove conversations on offers and counteroffers of the negotiated prices.

J&J, which saw a 62% cut from its list price for its blood thinner Xarelto, discussed the clinical values and Medicare beneficiary risk. For its autoimmune disease drug Stelara, which received a 66% cut from its list price, J&J discussed treatment persistence and drug survival and why the drug is different from certain therapeutic alternatives.

AbbVie, representing its cancer drug Imbruvica, discussed FDA approvals, patient perspectives, research and development, and patents and exclusivities. The medicine faced the lowest cut from its list price at 38%.

“In materials that are lengthy, often filled with cryptic fluff or old news from prior publications, the meeting minutes are a source of some real nuggets of insight,” Sarraille said.

The Next Round

Industry watchers are eyeing how the government and manufactures will approach the next negotiation round, which could start any day with the selection of an additional 15 Part D drugs.

“The documentation here helps prove to the future administration that this process worked,” said James Hodge, a health law professor at Arizona State University. “CMS helps strengthen that by following the book and getting drug companies to sit down and negotiate with them.”

The incoming Trump administration is slated to take the reins of the program. President-elect Donald Trump tapped TV personality Mehmet Oz, considered both a big pharma critic and investor, to lead the CMS.

“It will be interesting to see how this plays out,” Kaltenboeck said. “This year everyone was learning. Next year, both manufacturers and CMS will come in with experience to inform their negotiation strategies.”