Most of the medications that made the initial list for negotiation were widely anticipated by industry analysts, including Eliquis, a blood thinner that represented Medicare's largest expenditure for an individual medication in 2021. They also include Xarelto, another blood thinner; Jardiance, Januvia, Farxiga, and Novolog, which treat diabetes among other conditions; Enbrel and Stelara, for arthritis and psoriasis; Entresto, for heart failure; and Imbruvica, for cancers of the blood.
Still, there were some surprises. Umer Raffat, an analyst at Evercore ISI, expressed confusion in a research note over the inclusion of Stelara, which is set to have competition from a similar product in 2025, and Januvia, which is set to face generic alternatives from 25 companies by May 2026.
On the other hand, Amgen's Enbrel isn't expected to have generic competition until 2029, while Abbvie's Imbruvica is projected to have exclusivity through 2032 — making them the most susceptible to price controls. Matt Phipps, an analyst at William Blair, said that an IRA discount "will significantly reduce revenues" for Enbrel from Medicare and contribute to Imbruvica's challenges as it faces more competition.
Amgen and Abbive didn't respond to requests for comment.
The companies that manufacture the initial 10 medications subject to price caps will have a month to sign an agreement to negotiate. Medicare will make its initial price offer to the drugmakers by Feb. 1 and finalize the maximum prices by Sept. 1, 2024. The new rates won't take effect until January 2026.
The IRA allows Medicare to begin negotiating maximum prices on medications that lack competition from cheaper alternatives, starting seven to 11 years after the medications win approval from the Food and Drug Administration. That is generally a shorter time frame than company patents that protect them from cheaper competition, a period they depend on to recoup their development costs and make a profit.
It's common for companies to explore additional uses for a medication after approval, but that requires expensive research. Novartis, the maker of the heart failure medication Entresto that has been selected for negotiation, said it invested in clinical trials after winning approval in 2015 and ultimately expanded the conditions the medication is approved to treat in 2021.
Under the IRA, the company said Tuesday, "we may not have been able to invest in researching and developing Entresto in these additional indications, depriving patients of a meaningful treatment advance."
The majority of the medications that made the initial list for negotiation were widely anticipated by industry analysts, including Eliquis, a blood thinner that represented Medicare's largest expense for an individual medication in 2021. They also include Xarelto, another blood thinner; Jardiance, Januvia, Farxiga, and Novolog, which treat diabetes among other conditions; Enbrel and Stelara, for arthritis and psoriasis; Entresto, for heart failure; and Imbruvica, for blood cancers.
However, there were some surprises. Umer Raffat, an analyst at Evercore ISI, expressed confusion in a research note over the inclusion of Stelara, which is set to have competition from a similar product in 2025, and Januvia, which is set to face generic alternatives from 25 companies by May 2026.
On the other hand, Amgen's Enbrel isn't expected to have generic competition until 2029, while Abbvie's Imbruvica is projected to have exclusivity through 2032 — making them the most susceptible to price controls. Matt Phipps, an analyst at William Blair, said that an IRA discount "will significantly reduce revenues" for Enbrel from Medicare and contribute to Imbruvica's challenges as it faces more competition.
Amgen and Abbive didn't respond to requests for comment.
The companies that manufacture the initial 10 medications subject to price caps will have a month to sign an agreement to negotiate. Medicare will make its initial price offer to the drugmakers by Feb. 1 and finalize the maximum prices by Sept. 1, 2024. The new rates won't take effect until January 2026.
The IRA allows Medicare to begin negotiating maximum prices on medications that lack competition from less expensive alternatives, starting seven to 11 years after the medications win approval from the Food and Drug Administration. That is generally a shorter time frame than company patents that protect them from cheaper competition, a period they rely on to recoup their development costs and generate profits.
It's common for companies to explore additional uses for a medication after approval, but that requires expensive research. Novartis, the manufacturer of the heart failure medication Entresto that has been selected for negotiation, said it invested in clinical trials after receiving approval in 2015 and ultimately expanded the conditions the medication is approved to treat in 2021.
Under the IRA, the company said Tuesday, "we may not have been able to invest in researching and developing Entresto in these additional indications, depriving patients of a significant treatment advancement."
Thanks.