In a significant move on Thursday, the Biden administration announced pricing for 10 prescription medications under the Medicare program, an initiative that is part of the sweeping 2022 Inflation Reduction Act. Companies involved include major players such as Johnson & Johnson, known by its stock symbol $JNJ, and Merck, referred to as $MRK, among others.
The prices are set to take effect in 2026 for individuals covered under Medicare Part D, as outlined by the Centers for Medicare & Medicaid Services (CMS). If these adjustments had been implemented in the previous year, Medicare would have benefited from an estimated saving of approximately $6 billion, translating to a 22% reduction in costs, according to reports from CMS.
Furthermore, US Department of Health and Human Services Secretary Xavier Becerra stated that Americans paying out of pocket will see a collective savings of around $1.5 billion in the future. The negotiated pricing for a 30-day supply of Bristol-Myers Squibb’s blood thinner, Eliquis, stands at $231, a sharp decrease from its 2023 list price of $521.
In comparison, Johnson & Johnson's Xarelto will be priced at $197, down from $517. Merck's diabetes medication, Januvia, will be available for $113 instead of the current $527, and AstraZeneca’s heart drug, Farxiga, will drop to $178.50 from $556. Meanwhile, two other leading firms, Eli Lilly ($LLY) and Boehringer Ingelheim, will offer Jardiance at a new price of $197, significantly lower than its 2023 price of $573. For Novartis’ heart-failure treatment, Entresto, the new price will be $295 compared to the previous $628.
Amgen's Enbrel, aimed at rheumatoid arthritis patients, will see a decrease from $7,106 to $2,355. Additionally, AbbVie's Imbruvica will lower its price to $9,319 from $14,934, while Janssen, a unit of Johnson & Johnson, will set the price for Stelara at $4,695, down from $13,836. Insulin from Novo Nordisk will also be affected, with a new price of $119 compared to $495. President Joe Biden emphasized the government's commitment to ensuring that all American citizens can access more affordable prescription drugs, stating, "We will continue the fight to make sure all Americans can pay less for prescription drugs and to give more breathing room for American families." As part of the ongoing effort towards drug price negotiation, the CMS has announced that by February 1, 2025, it will determine up to 15 additional drugs for negotiation under Part D for the year 2027.
Furthermore, a subsequent selection process for another 15 drugs for either Part B or D will commence for 2028, followed by 20 more drugs for each year thereafter, in compliance with the obligations set forth by the IRA. Bristol-Myers Squibb has projected its Eliquis revenue for 2026 to range between $8.5 billion to $10.5 billion in the US alone, with global expectations between $10.5 billion and $12.5 billion.
For 2027, the forecasted sales for Eliquis are anticipated to be between $8 billion to $10 billion in the US and $8.5 billion to $11 billion globally. In a separate legal matter, Novo Nordisk filed an appeal with the US Court of Appeals for the Third Circuit after a federal judge dismissed its challenge against the Medicare Drug Price Negotiation Program.
In a statement to MT Newswires, the company reiterated its opposition to any form of government-imposed price setting through the IRA. Despite this challenge, Novo Nordisk will ensure that the new pricing will be available to Medicare beneficiaries starting in 2026. On the other hand, AstraZeneca, Novartis, Johnson & Johnson, Boehringer Ingelheim, and Eli Lilly have voiced concerns regarding the new price setting.
A spokesperson from Johnson & Johnson expressed that the reality of government price setting under the IRA would lead to higher costs for US patients. Novartis commented, "We acceded to a 'maximum fair price' for Entresto for 2026 only to avoid other untenable options, including catastrophic fines or the removal of all our products from both Medicare and Medicaid." As for responses from Amgen, AbbVie, and Merck, those companies have not issued any comments regarding these developments..