Pharma damps effects of first drug price talks
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As drugmakers continue to try to overturn Medicare drug price negotiations in courts, they're telling Wall Street the negotiations won't materially affect their bottom lines in the short run.
Why it matters: Talks on the first 10 drugs will conclude by Thursday, and Medicare must release final negotiated prices by Sept. 1, though patients won't see lower price tags until 2026.
- Many of those drugs already are facing competition and looming patent expirations. But in the long run, the industry maintains the talks could have a significant financial effect and slow the drug development pipeline.
Driving the news: "It is what it is. It is the law of the land, and we are doing our best to make sure that we minimize any impact, particularly in the future," Pfizer CEO Albert Bourla said Tuesday in a call with analysts, during which the company adjusted full-year projections upward.
- The company's blood thinner Eliquis, co-produced by Pfizer and Bristol-Myers Squibb, is one of the 10 drugs selected for the first round of price negotiations.
- Eliquis cost Medicare more than any other prescription drug between June 2022 and May 2023, according to the Biden administration.
- "Now that we have seen the final price, we're increasingly confident in our ability to navigate the impact of [price negotiations] on Eliquis," Bristol-Myers CEO Chris Boerner said on a call with analysts last week.
Yes, but: Executives maintain R&D and patients will be harmed in the long run.
- "While in the short term this might be manageable on our first set of drugs, in the long run, this policy is really not good for innovation [or] good for patients in the United States," Novartis CEO Vasant Narasimha told analysts earlier this month.
- Analysts have predicted future rounds of price negotiations may be more difficult for companies' bottom lines.
State of play: Pfizer raised its revenue outlook for 2024 by $1 billion, the company said Tuesday.
- Other manufacturers with drugs selected for negotiation, including Novartis and AstraZeneca, also raised their profit outlook for the year.
- Comments from Bristol-Myers Squibb and Johnson & Johnson suggest the negotiated prices for their drugs have ended up better than expected, Reuters reported.
Where it stands: Analysts are "becoming cautiously more optimistic" on the outlook for Eliquis' negotiated pricing, according to Lee Brown, global sector lead for health care at research firm Third Bridge.
- "We're hearing that the maximum fair price for each of the 10 drugs ... represent manageable levels relative to current pricing," Brown told Axios, reinforcing similar comments from pharmaceutical executives earlier this year.
