Unlocking Affordable Medicare Drug Prices: AstraZeneca and Bristol Myers Squibb’s Negotiations for Affordable Healthcare

AstraZeneca, Bristol Myers Squibb and Boehringer Ingelheim confirmed their participation in the inaugural Medicare drug price negotiations despite previously filing a lawsuit last month.

Among the first 10 drugs chosen for price discussions with Medicare are Farxiga by AstraZeneca, Jardiance by Boehringer Ingelheim, and Eliquis by Bristol Myers Squibb. These three companies are the first to show their willingness to engage in negotiations that aim to address the escalating costs of prescription drugs for older Americans.

The seven remaining manufacturers have until October 1 to indicate their intention to participate. CNBC’s request for comments on their plans went unanswered.

In a statement given to CNBC, AstraZeneca expressed its commitment to ensure access to FARXIGA and join the discussions facilitated by the Centers for Medicare and Medicaid Services (CMS).

Boehringer Ingelheim, a privately held company, stated that it is committed to open and transparent dialogues with CMS.

A spokesperson for Bristol Myers Squibb stated that the company had no alternative but to accept the “agreement.”

“If we choose not to sign, we would face excessively high penalties or be required to withdraw all our medicines from Medicare and Medicaid. That’s not a viable choice,” the spokesperson explained.

Failure to participate in the negotiations may result in drugmakers being subject to an excise tax of up to 95% of their medication’s U.S. sales or the removal of their products from the Medicare and Medicaid markets, as outlined by CMS.

Besides Bristol Myers, AstraZeneca, and Boehringer Ingelheim, other drugmakers such as Johnson & Johnson and Merck have filed multiple lawsuits recently to declare these negotiations unconstitutional. The Chamber of Commerce, one of the most influential lobbying organizations, has also filed a lawsuit seeking a preliminary injunction before October 1.

The pharmaceutical industry strongly opposes this process, citing concerns over revenue growth, profits, and drug innovation. Analysts, however, expect companies to face minimal financial losses initially as many of the selected drugs are already approaching patent expirations, which will likely impact revenue.

For instance, Farxiga is expected to lose its market exclusivity in 2026, opening the doors to generic alternatives. Coincidentally, this is the same year renegotiated prices will come into effect.

The Inflation Reduction Act, passed by Congress in a narrow vote last year, grants Medicare the authority to negotiate drug prices for the first time in its history spanning six decades. This legislation serves as a cornerstone in the Biden administration’s endeavors to control the rising costs of prescription drugs and marks a significant win for the Democratic Party.

Last month, the administration announced the initial batch of drugs to undergo price negotiations, initiating a lengthy process set to conclude in August 2024.