Pharmaceutical companies are due to receive by Thursday the U.S. government's opening proposal for what are expected to be significant discounts on 10 of its high-cost medicines, an important step in the Medicare health program's first ever price negotiations.
Five Wall Street analysts and two investors told Reuters they expect the negotiations over prices that will go into effect in 2026 to result in cuts ranging from the statutory minimum of 25% to as much as 60% when the final numbers are set in September.
The drugmakers and the government are expected to wait until then to disclose them.
President Joe Biden’s signature Inflation Reduction Act (IRA), signed into law last year, allows Medicare, which covers 66 million Americans mostly aged 65 and older, to negotiate prices for some of its most costly drugs.
The price cuts will impact how much the government pays for the drugs as it aims to save $25 million per year by 2031. It could also save money for consumers who pay a portion of a drug's cost under their Medicare plans.
"There's no way to really predict exactly what the discounts will be, so we just assume they're going to be very high," said Andy Acker, a portfolio manager for healthcare and biotech at Janus Henderson.
The first 10 drugs include Bristol Myers Squibb and Pfizer's blood thinner Eliquis, Merck & Co's diabetes drug Januvia and Johnson & Johnson's blood thinner Xarelto.
Acker said the impact of the price cuts on company revenue will be limited for the first group of drugs negotiated because they are due to face generic competition soon afterwards that would drive down prices anyway.
Pharmaceutical companies and business groups have filed more than half a dozen lawsuits to stop the negotiations from taking place, saying that they are unlawful.
Drug companies say the law's costs will hurt drug development programs and patients.
https://finance.yahoo.com/news/1-pharma-price-cut-proposals-194836673.html
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