Trump’s First Drug Negotiation Move Sparks Combo Medicine Fight

A new fight is brewing over the Medicare drug price negotiation program after the Trump administration proposed to consider an additional form of drugs for price cuts, spurring more legal and policy concerns from the pharmaceutical industry.

The proposal would allow the Centers for Medicare & Medicaid Services to select a fixed-dose combination drug for negotiations if the agency determines it doesn’t have a “clinically meaningful difference” compared to its original drug with the same active moiety or ingredient. Fixed-dose combinations contain multiple medications in a single dosage form to help simplify treatment for patients.

The pharmaceutical industry has been resisting the proposal, raising questions about the government’s legal authority and statutory basis to implement it. If finalized, the move could be a problem for Merck & Co.’s Keytruda, Bristol Myers Squibb Co.’s Opdivo, and Johnson & Johnson’s Darzalex—top cancer drugs that could be picked for price cuts with their fixed-dose combinations.

“This will be a big fight,” said Sean D. Sullivan, professor of pharmacy at the University of Washington. The government can expect Merck and Bristol Myers to especially push back because they’ve both created products that are extended with hyaluronidase, an ingredient that may not be exempt from negotiations, he said.

The administration is slated to finalize the draft guidance featuring the proposal, which is the first of the negotiation program under President Donald Trump, in the fall. If included, legal challenges are expected as the industry continues to take the government to court over the program’s implementation.

“Such approach is contrary to the plain language of the statute, is inconsistent with prior CMS guidance, and departs from well-established FDA regulations regarding fixed dose combination drugs,” Bristol Myers said in comments to the agency. “This interpretation undermines incentives for innovation in a way that will be detrimental to current and future patient access to crucial medicines for years to come.”

Merck did not respond to requests for comment but its CEO, Rob Davis, said at the Goldman Sachs Global Healthcare Conference in June that the proposal is “more of a concern of the precedent it sets” and “brings lack of clarity and unpredictability.”

J&J did not respond to requests for comment, but the company is confident Darzalex won’t be selected for negotiations prior to 2034 because its combination drug “delivers clinically meaningful benefits,” Tom Cavanaugh, J&J group chairman, said at the same conference.

Scientific, Legal Grounds

The proposal departs from previous guidance that said fixed combinations won’t be aggregated with products containing only one of the active moieties or ingredients in the combination drug.

The latest guidance now indicates the government may exercise more discretion to combination drugs and group them with medicines that have different administration routes, labels, and patient population targets.

“It’s literally the difference between a minutes-long injection and a much longer, sometimes hours-long, infusion,” said John O’Brien, CEO of the National Pharmaceutical Council. “That matters to patients.”

The industry says the proposal lacks legal and scientific grounds as it would be inconsistent with the Food and Drug Administration’s regulations and how Congress outlined the program under the Inflation Reduction Act in 2022.

The FDA defines a fixed-combination drug as two or more drugs that may be combined in a single dosage-form when each component makes a contribution to the claimed effects and the drug is safe and effective.

“This regulation explicitly recognizes special cases where components are added ‘to enhance the safety or effectiveness of the principal active component,’” the Pharmaceutical Research and Manufacturers of America said. If the “FDA has deemed a drug a fixed dose combination drug, it should be treated as such across agencies,” the Biotechnology Innovation Organization similarly said.

These concerns follow criticisms shared in ongoing lawsuits challenging the agency’s definition of a “qualifying single source drug,” which defines which drugs are eligible for price cuts.

Drugmakers have long opposed the government’s definition because it determines that two or more drugs approved under distinct FDA applications should be treated as one qualifying single source drug.

Novo Nordisk A/S challenged the agency when it deemed six of its insulins as a single product subject to price controls, and Teva Pharmaceuticals Inc. sued the CMS when it grouped two of its drugs that treat movement disorders as one product.

Novartis AG, which offers a variety of fixed-dose combinations, said to the CMS that the agency can’t “reasonably justify creating” a new standard for combination drugs.

Drug companies “are going to work awfully hard to make the case” against this proposal, said Brian Reid, a consultant at Reid Strategic who works with drugmakers on pricing issues. “These are actual meaningfully, therapeutically, synergistic combos.”

The Right Question

Despite industry pushback, the government is “rightly asking the question” of whether these reformulation drugs should be exempt from negotiations, said Anna Kaltenboeck, president of Verdant Research.

Oncology drugs such as Keytruda and Opdivo are reformulating with hyaluronidase, which is considered an active ingredient by the FDA, but doesn’t have a standalone therapeutic benefit, she said.

“That doesn’t make the drug more effective. It just changes the way it’s administered,” Kaltenboeck said.

The agency’s proposal is also valid because it could prevent drugmakers from resetting the negotiation clock by introducing modified versions of existing drugs, said Ben Rome, an assistant professor of medicine at Harvard Medical School.

“This proposed clarification says CMS could negotiate both of those products together, and that’s not to say that CMS won’t recognize the added value,” Rome said. “I think CMS is within its power to create a set of standardized rules and implement what Congress had intended under law.”