Analysts Expect CMS to Ask for Steep Drug Discounts in Initial IRA Proposal: Reuters

HHS Sign_iStock, JHVEPhoto

Pictured: Sign for U.S. Department of Health and Human Services at site in Washington, DC/iStock, JHVEPhoto

Analysts expect the Biden administration to set steep price cuts in its opening proposals under the Inflation Reduction Act’s Drug Price Negotiation Program, Reuters reported Monday. The initial maximum fair price proposals and justification are due to pharma companies that make the 10 impacted drugs by Thursday.

Citing five Wall Street analysts and two investors, Reuters noted that the price cuts could range from a statutory minimum of 25% to as high as 60% when the final prices are set and published by Sept. 1, 2024.

“There’s no way to really predict exactly what the discounts will be, so we just assume they’re going to be very high,” Andy Acker, portfolio manager for healthcare and biotech at Janus Henderson, told Reuters. Acker added that the first batch of price cuts is unlikely to severely impact the companies’ revenues, since the drugs are set to face generic competition soon after the new pricing takes effect.

While the negotiations are not confidential, the Centers for Medicare and Medicaid Services (CMS) has said it will not publicly discuss the ongoing talks with drugmakers—including its initial offers—unless one of the companies discloses the details, according to Reuters.

The pharma companies have until March 2 to either accept the government’s maximum fair price proposal or submit a counteroffer, according to a CMS fact sheet.

At a JPM Week event earlier this month in San Francisco, Incubate—a lobbying group for venture capital firms in the life sciences—predicted that all 10 companies will not accept the opening CMS offers and will make counteroffers.

“These prices will be announced in September of a presidential election year. I would be hard-pressed to imagine the Biden administration announcing fairly meager cuts,” Incubate Executive Director John Stanford said. “I think we will see draconian cuts and I think the political pressures will drive some of that.”

President Joe Biden signed the Inflation Reduction Act (IRA) into law in August 2022, seeking to save some $25 billion in drug spending for the federal government annually by 2031. The IRA empowers CMS to negotiate the prices for some of the most widely prescribed drugs, with the new pricing to take effect in 2026.

In August 2023, CMS named the first 10 medicines impacted by the negotiation program. The list includes BMS’s Eliquis (apixaban), Lilly’s Jardiance (empagliflozin), J&J’s Xarelto (rivaroxaban), Imbruvica (ibrutinib) and Stelara (ustekinumab), Merck’s Januvia (sitagliptin) and AstraZeneca’s Farxiga (dapagliflozin).

Novartis’ Entresto (sacubitril/valsartan), Amgen’s Enbrel (etanercept) and Novo Nordisk’s insulin products Fiasp and NovoLog will also be part of the first round of drug price negotiations.

The biopharma industry has strongly opposed the IRA Drug Price Negotiation Program, with companies including Merck, Novartis and AstraZeneca filing lawsuits seeking to block its implementation. Nevertheless, in October 2023, all 10 drugmakers were forced to reluctantly agree to participate in the program.

Throughout the spring and summer of 2024, CMS will hold up to three negotiation meetings with the participating companies to settle on a maximum fair price. The negotiation period is scheduled to end on Aug. 1, with the agency to publish the final negotiated prices by Sept. 1.

Tristan Manalac is an independent science writer based in Metro Manila, Philippines. He can be reached at or

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