Congressional Democrats' slimmed down drug pricing plan may not lower spending on pharmaceuticals by nearly as much as their most ambitious proposal would have, but it could still have a substantial effect on some of the industry's top-selling products.
Pfizer, Bristol Myers Squibb, AbbVie and Regeneron, for instance, could potentially be impacted by the legislation, which emerged this week after the Biden administration had seemingly given up on securing a place for drug pricing policy in its sweeping "Build Back Better" spending plan.
The new bill would grant the federal government power to negotiate drug prices — a long-held Democratic goal — but represents a significant compromise as its scales back the number of products eligible for negotiation to 20 older drugs. Previous legislation backed by dozens of House Democrats had sought to allow negotiation on at least 50 products.
Under the new proposal, these older drugs, defined as those no longer protected by regulatory exclusivity and lacking generic competitors, would be subject to price negotiation with the Centers for Medicare and Medicaid Services.
Initially, CMS would negotiate prices of 10 drugs in 2023, agreements that would then take effect in 2025. Drugmakers that do not come to the table would face a potentially steep excise tax — a feature the industry has fiercely objected to.
The legislation would limit eligible products to small molecule drugs that have been on the market for at least nine years and biologic drugs that have been available for at least 12 years. Small molecule drugs are typically given as pills, while biologics are infused or injected.
President Joe Biden has endorsed the plan, as have key Democratic lawmakers, and legislative language emerged late Wednesday. While it's not clear which specific drugs could be affected, drug spending data from CMS provides some clues.
The tables below include five physician-administered drugs covered by Medicare Part B as well as five self-administered drugs covered by Part D that could be the subject of negotiation in the first round, based on the criteria outlined in the legislation.
Part B drugs that could be subject to negotiation
Medicare spending, 2019 ($ millions)
|Orencia||Bristol Myers Squibb||2005||$920|
Among physician-administered drugs, other products that could soon be subject to negotiation based on their time on the market are Merck & Co.'s Keytruda, Bristol Myers' Opdivo, and Novartis' Sandostatin LAR, the last of which has been on the market without competition for more than 20 years.
Bristol Myers and Pfizer's blood thinner Eliquis, as well as Eli Lilly and Boehringer Ingelheim's diabetes medicine Jardiance, meanwhile, might be targets in Part D.
Part D drugs that could be subject to negotiation
|Drug||Company||Year launched||Medicare spending, 2019 ($m)|
|Eliquis||Bristol Myers Squibb/Pfizer||2012||$7,306|
|Imbruvica||AbbVie/Johnson & Johnson||2013||$2,440|
|Jardiance||Eli Lilly/Boehringer Ingelheim||2014||$1,448|
Other self-administered drugs that could be under pressure soon if the measure passes include Amgen's Enbrel, J&J's Invega Sustenna and Sumitomo Dainippon's Latuda.
Under the legislation, once CMS and manufacturers conclude their negotiations, their agreement will remain in place until the government decides the drug is no longer a high-cost "selected" product. That could mean the list of drugs with negotiated prices grows longer over time than the original set selected.
Negotiation isn't the only price control measure included in the package. The federal government would also be able to impose higher rebates on drugs that have price increases that exceed the rate of a certain type of consumer price inflation.
While the legislation is significantly pared back from prior proposals, the pharma industry is still vehemently opposed. "Under the guise of negotiation, it gives the government the power to dictate how much a medicine is worth and leaves many patients facing a future with less access to medicines and fewer new treatments," Steven Ubl, CEO of the drug lobby PhRMA, said in a statement.
On an earnings conference call this week, Pfizer CEO Albert Bourla noted that, through its managed care plans, Medicare already negotiates prices on many drugs, and criticized the new proposal as more government interference in the marketplace.
"What people in some parts of the political spectrum want to see is not negotiation, [but] price fixing," he said during the call.
While likely to pass the House, the legislation's future will depend on negotiations with leaders and key moderate lawmakers in the Senate. The latter group could still oppose it based on industry objections or other factors as Congress considers a wide array of spending bills.