Drugmakers give surprising response to Medicare drug price offers

Pharmaceutical executives have reacted surprisingly optimistically to Medicare’s initial offer to negotiate drug prices, signaling they are walking away from industry lawsuits warning of dire consequences for the program.

While the details of the proposal remain secret and some believe the price cuts are relatively modest, patient groups say the CEO may be paying lip service to investors worried about a hit to profits. Be suspicious of.

Either way, officials are confident the program, part of President Biden’s Inflation Control Act (IRA), will ultimately result in significant savings for Medicare.

The Centers for Medicare and Medicaid Services (CMS) sent out an initial offer on February 1, and all drug companies involved sent back counter-offers a month later.

Neither side has released numbers, but executives from Pfizer and AstraZeneca have given some hints about their companies’ feelings.

AstraZeneca CEO Pascal Soriot he told reporters last month.“What we’ve seen is that [a] The comeback from CMS is relatively encouraging. ”

David Denton, Chief Financial Officer of Pfizer, said: told investors last week“We have products that are nearing the end of their lifecycles, so the long-term IRA impact will not be as significant.”

The Hill has reached out to other companies in product negotiations for comment.

Zachary Baron, director of the O’Neill Institute’s Health Policy and Law Initiative, said these statements are a sign of the position drug companies have been placed in by filing lawsuits to halt negotiations while remaining actively involved. He said that it reflects the

“They have a duty to be honest with their investors, and there is certainly the potential for them to face legal risks on that front. There always has to be some kind of balance in terms of points,” Baron said.

“Their lawyers need to follow certain ethical guidelines to talk about the harm, while at the same time comforting the investors on the other side, saying, ‘Don’t run away from this business and opportunity. It’s not going to be as bad as you think.’ .”

Advocates for drug affordability were not surprised by the pharmaceutical executives’ comments.

“We expected them to say something like this,” said Merris Basie, executive director of the advocacy group Patients Affordable Medicines. -Told Hill.

She went on to say, “It’s important to note that the IRA’s influence doesn’t affect their bottom line, just as every time someone tries to touch something that gets in the way of their monopoly power, they want to cry for pity.” We know,” he added.

In a number of lawsuits brought by drug companies and industry groups, lawyers argue that even though prices are still years away from taking effect, companies have already suffered significant harm as a result of the Medicare bargaining program. He claimed that

He noted that when a federal judge ruled against AstraZeneca’s lawsuit to block negotiations, the company’s lawyers “barely mentioned” the alleged damages during oral arguments.

U.S. District Judge Colm Connolly said the company had “not identified any damages previously recognized as grounds for action similar to or closely related to loss or reduction of incentives.” .

Other judges have issued similar rulings, finding that the plaintiffs have not yet demonstrated actual harm to them from the IRA provisions.

Basie emphasized that while a discount of a few hundred dollars per prescription may not be a big deal to these companies, the same amount would be transformative for many Medicare beneficiaries.

Last year, the Congressional Budget Office projected that as a result of negotiations, the average price of drugs covered by Medicare Part D would fall by 8% by 2031, and by 9% for drugs covered by Part B.

The bureau estimated that this would reduce the federal deficit by $25 billion over the same period.

Other advocates said the companies may be trying to maintain credibility in the national health care debate as policymakers look for ways to cut costs.

“There’s also the reality that they’re saying the sky is falling. And if CMS offers a price that’s completely reasonable, that will give it a lot more credibility,” said AARP Public Policy Institute Director of Prescription Drug Policy. Lee Purvis said.

“I think this is a situation where they could potentially lose even more power in terms of their ability to influence the public and policy makers,” Purvis added. “So it’s possible – again, we don’t know what’s going on behind the scenes – but we don’t make very dramatic statements like this, recognizing that the reality is likely to be very different.” That may have an impact on their willingness to come forward.”

No matter what drug company leaders say, advocates say so far there’s no reason to believe that the savings from negotiations won’t be much greater for Medicare beneficiaries.

“I think the projections that researchers have made indicate that we still expect significant federal savings and downward pressure on premiums and patient out-of-pocket costs,” Baron said.