Medicare Set to Negotiate Prices for 10 Key Drugs; Pharmaceutical Stocks React

Medicare is now poised to negotiate prices for a list of 10 drugs including Eliquis, Jardiance, and Stelara, following the implementation of the Inflation Reduction Act.

In August 2022, the Inflation Reduction Act (IRA) was enacted, granting Medicare the unprecedented right to negotiate drug prices directly.

On Tuesday, the Centers for Medicare and Medicaid Services revealed the initial lineup of drugs for negotiation. This list encompasses Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Fiasp.

Pharmaceutical giants associated with these drugs include Bristol Myers Squibb (BMY), Eli Lilly (LLY), Johnson & Johnson (JNJ), Merck (MRK), AstraZeneca (AZN), Novartis (NVS), Amgen (AMGN), AbbVie (ABBV), and Novo Nordisk (NVO). Early Tuesday, stock movements for these companies showed minimal shifts. For instance, Bristol Myers rose by 0.5%, Eli Lilly increased by 0.2%, while Johnson & Johnson and AstraZeneca saw declines of 0.2% and 0.5%, respectively.

From June 2022 to May 2023, which serves as the benchmark period for drug negotiation eligibility, approximately 8.2 million Medicare Part D beneficiaries relied on these drugs for various medical needs. During this span, these drugs were responsible for $50.5 billion in Part D’s overall prescription drug expenses.

Some pharmaceutical companies have expressed concerns over their drugs being on this list. Bristol Myers, the company behind Eliquis, highlighted that “Medicare beneficiaries currently obtain ELIQUIS at an average monthly out-of-pocket cost of $55.” They further warned of potential accessibility issues, asserting that the government hasn’t guaranteed insurers will provide these chosen drugs in the future without potential cost or access barriers.

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Medicare Set to Negotiate Prices for 10 Key Drugs; Pharmaceutical Stocks React

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