Stay informed with free updates on Drug prices
Get a myFT Daily Digest email every morning, summarizing the latest news on Drug prices.
Similar to Big Tobacco, drug companies are not well-regarded on Capitol Hill. However, one issue that brings together both Republican and Democrat voters in the divided America is the need to address the skyrocketing drug prices. The United States spent an unprecedented $378 billion on prescription drugs in 2021.
In an attempt to tame the beast of healthcare costs, the Biden administration has announced a list of 10 prescription drugs that will be subject to price negotiations under the Inflation Reduction Act. Medicare will be involved in these negotiations.
The drugs included in the list have cost Medicare over $50 billion in the 12 months leading up to May 31, as reported by the Centers for Medicare and Medicaid Services. The list includes Eliquis, a blood thinner produced by Bristol Myers Squibb (BMS) and Pfizer, the diabetes treatment Jardiance sold by Boehringer Ingelheim and Eli Lilly, and Xarelto, another blood clot prevention medicine from Bayer and Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson.
BMS appears to be the most vulnerable as it relies heavily on the revenue generated by Eliquis, which accounted for over a quarter of its total revenue last year. Wells Fargo predicts that the company could experience a 4% decline in annual revenue, while Pfizer could see a 1% decrease in sales. However, much of this risk is already factored into the stock prices, with both companies’ stocks down by 13% and 29% respectively this year.
It is important to note that more drugs will be added to the list in the future. However, it is premature to conclude that the sell-off is justified. The negotiation process is lengthy, and the lower prices would not take effect until 2026. Additionally, lawsuits filed by drugmakers and trade groups challenging Medicare’s new negotiating powers could potentially prevent the price cuts from happening.
Many of the drugs included in the list are older and nearing the expiration of their patent protections. Furthermore, companies can find ways to circumvent these restrictions by launching drugs at higher list prices before they become subject to Medicare negotiations. Despite the buzz surrounding this issue, the actual impact of price controls is likely to be less dramatic than anticipated.
Listen to Elaine Moore, the deputy editor at Lex, as she discusses the future of social media with creators, companies, and critics in the new Tech Tonic podcast series by the FT.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
