Drugmakers on new negotiated prices with Medicare

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Good afternoon! The first round of Medicare drug price negotiations has come to an end – but we still don’t know the final prices that the U.S. government and pharmaceutical companies have agreed on. 

Medicare will disclose the new negotiated prices for 10 drugs at the beginning of September. Those prices will then go into effect in 2026. 

Still, drugmakers appear to be less concerned about the impact of those new negotiated prices on their businesses than in recent months, at least in the short term. They all maintain that Medicare drug price negotiations are a long-term threat to the pharmaceutical industry’s drug innovation and profits, but the immediate dust has somewhat settled. 

That’s based on executive commentary during the recent quarterly earnings calls of Bristol Myers Squibb and Johnson & Johnson, among other companies. 

President Joe Biden’s Inflation Reduction Act gave Medicare the power to directly hash out drug prices with manufacturers for the first time in the federal program’s nearly 60-year history. The process aims to make expensive medications more affordable for older Americans. 

On July 26, Bristol Myers Squibb CEO Christopher Boerner confirmed that the company received the government’s final price for its blood thinner Eliquis, which it shares with Pfizer. 

He said now that the company has seen that price, it is “increasingly confident in our ability to navigate the impact” of Medicare drug price negotiations on the treatment. Bristol Myers will provide more details about the expected impact on its investor relations website once Medicare publicly discloses the final prices, according to Boerner. 

Meanwhile, AbbVie CEO Robert Michael said a day earlier that the drugmaker has included the expected sales hit to its top-selling leukemia drug, Imbruvica, in its financial forecasts. 

“We’ve come out and said that even with modeling that impact in, that we still expect to deliver on our long-term outlook,” Michael said on the company’s earnings call. 

On July 17, J&J Worldwide Chairman Jennifer Taubert similarly said the company’s long-term growth outlook “still looks very good to us today” after seeing the negotiated prices for its blood thinner Xarelto and psoriasis treatment Stelara. 

Novartis CEO Vasant Narasimhan said on July 18 that the short-term impact from Medicare drug price negotiations “might be manageable on our first set of drugs.” The company’s heart failure drug, Entresto, is among those selected for negotiations. 

But Narasimhan said the policy in the long-term is “really not good for innovation [or] good for patients” in the U.S.

“I think it’s very important to say the policy is not a good one. It’s bad for American patients, it’s bad for innovation and [I] sincerely hope that it gets corrected,” he said. 

Executives at each of the drugmakers similarly emphasized their opposition to Medicare drug price negotiations on their respective earnings calls. 

“We continue to believe that arbitrary price setting by the government on life-saving medicines is not good public policy,” Bristol Myers Squibb’s Boerner said on the company’s earnings call. “Irrespective of short-term dynamics, we remain very concerned about the long-term implications of IRA on innovation.”

Lawsuits brought by Merck and Novartis against the negotiations are awaiting decisions from district courts. Each case brings claims that overlap with suits from Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, J&J and industry trade groups that have been rejected in recent months. 

Feel free to send any tips, suggestions, story ideas and data to Annika at [email protected].

But Northwell Health, the largest health system in the state of New York, is breaking new ground in the entertainment world. In late July, it launched a TV and film production studio called Northwell Studios. 

The goal is not to turn the studio into a money-making machine, said Ramon Soto, chief marketing officer at Northwell Health. The health system actually plans to ensure most projects remain cost neutral. 

Instead, Soto said the studio was created to help raise awareness about Northwell, especially since it operates within a competitive and saturated market. The New York metropolitan area is teeming with prestigious health systems and academic medical centers, and it’s Soto’s job to cut through the noise. 

Northwell has dabbled with entertainment projects in the past. It participated in the Netflix docu-drama series “Lenox Hill” as well as an Academy Award-shortlisted Covid-19 documentary and a documentary about mental health with HBO. 

Soto said Northwell Studios is meant to help the health system carry out these kinds of projects more regularly. 

“The intention behind Northwell Studios is not, ‘Hey, we’re going to show up, it’s showbiz and get our name in lights.’ It’s really to create a bit more of an infrastructure to do this on a regular basis,” Soto told CNBC in an interview. “I’m not building a soundstage, I’m not building a studio, but I have millions of square feet and 21 hospitals and 88,000 employees, caregivers, storytellers.”

Soto said there are already five projects in development, though not all of them will necessarily come to completion. He said unscripted content has been Northwell’s “bread and butter” so far, and there’s an extensive consent process in place for the patients and employees who opt in. 

Northwell Studios is also exploring opportunities to produce scripted content, but patients shouldn’t expect to see actors and camera crews running through the halls.

“We’re a health system, we can’t disrupt our operations or patient flows,” Soto said. “We’ll figure out the least disruptive, most impactful way to capture this content.”

Feel free to send any tips, suggestions, story ideas and data to Ashley at [email protected].