In a significant move to enhance affordability for prescription medications, the Biden administration has unveiled new price structures for ten specific drugs, including those from prominent pharmaceutical giants such as Johnson & Johnson and Merck. This initiative, part of the 2022 Inflation Reduction Act, aims to facilitate negotiations between the Medicare program and drugmakers, marking a pivotal step in reshaping the pharmaceutical pricing landscape. According to the Centers for Medicare & Medicaid Services (CMS), these revised prices will come into force for individuals enrolled in Medicare Part D prescription drug coverage starting in 2026.
If these prices had been enacted last year, Medicare could have realized savings of approximately $6 billion, amounting to a substantial 22% reduction in spending. Secretary of the U.S. Department of Health and Human Services, Xavier Becerra, highlighted the positive implications, stating that Americans bearing out-of-pocket costs could save an additional $1.5 billion moving forward. Among the drugs subjected to these negotiations, Bristol-Myers Squibb's blood thinner Eliquis will see its price adjusted to $231 for a 30-day supply, down from its 2023 list price of $521.
Similarly, Johnson & Johnson's competitor Xarelto will be priced at $197, a decrease from $517. Merck's Januvia, a medication for diabetes, will now be available for $113, significantly lower than its prior price of $527. Additionally, AstraZeneca's Farxiga will transition to a price of $178.50 from $556, indicating a notable trend towards more affordable cancer and diabetes treatments. Eli Lilly and Boehringer Ingelheim's Jardiance will have a new price point of $197, reduced from $573.
In terms of heart failure treatments, Novartis' Entresto will be priced at $295 instead of $628. Notably, Amgen’s Enbrel for rheumatoid arthritis will see a significant price drop to $2,355, down from $7,106, while AbbVie's Imbruvica, used for blood cancer, will fall to $9,319 from its previous price of $14,934.
Furthermore, Johnson & Johnson unit Janssen's Stelara, targeting arthritis and Crohn's disease, will cost $4,695, a notable decrease from $13,836, while insulins from Novo Nordisk will be priced at $119, compared to $495. President Joe Biden expressed his commitment to ensuring that all Americans have access to more affordable prescription drugs, emphasizing the importance of easing financial burdens on families.
The CMS plans to further expand its negotiations, indicating that by February 1, 2025, up to 15 additional drugs covered under Part D will be selected for negotiation in 2027. This process will continue with up to 15 more drugs for 2028 and an increasing number of drugs selected each year thereafter, as stipulated by the Inflation Reduction Act. In terms of revenue forecasts, Bristol-Myers Squibb anticipates Eliquis sales in the United States to range between $8.5 billion and $10.5 billion for 2026, projecting a global revenue of between $10.5 billion and $12.5 billion.
For 2027, the company expects U.S. sales to be between $8 billion and $10 billion, alongside worldwide estimates of $8.5 billion to $11 billion. In response to these developments, Novo Nordisk lodged an appeal with the U.S. Court of Appeals for the Third Circuit following a federal judge's dismissal of its arguments against the Medicare Drug Price Negotiation Program.
The company reiterated its stance against government-imposed price setting through the Inflation Reduction Act while assuring that it would ensure the availability of the newly negotiated prices for Medicare beneficiaries by 2026. Several pharmaceutical companies expressed their reservations regarding the implications of these government negotiations.
AstraZeneca, Novartis, Johnson & Johnson, Boehringer Ingelheim, Lilly, and Merck conveyed their critiques in separate communications. A spokesperson from Johnson & Johnson mentioned that the reality of government-mandated pricing through the Inflation Reduction Act could ultimately lead to higher costs for U.S.
patients. Meanwhile, Novartis stated that it agreed to a 'maximum fair price' for Entresto for 2026 primarily to evade more severe consequences, including hefty fines or the potential removal of their products from Medicare and Medicaid programs. Merck also voiced its disagreement, stating that the new pricing for Januvia does not reflect a fair market price.
The company raised concerns that the Inflation Reduction Act's pricing policies might stifle future innovation and research investments, ultimately hindering patient access to new treatments and cures. In contrast, comments from Amgen and AbbVie remain unaddressed as they did not respond to inquiries regarding their positions on these price adjustments..