Leerink Partners previews the drugs likely to be subject to the Inflation Reduction Act’s next price negotiations as the program expands to Medicare Part B and smaller biotechs.
Immuno-oncology stalwarts Keytruda and Opdivo are likely to targeted in the Inflation Reduction Act’s next round of price negotiations, as the program expands from focusing solely Medicare Part D to also include Part B drugs, according to a new report from Leerink Partners.
This puts therapies that are administered by a healthcare professional during a hospital stay or in an outpatient setting within the purview of the price reduction program for the first time. Leerink’s latest report flags the companies and drugs that are most likely to see their products up for price negotiation as the next round of IRA-prescripted negotiations commences. The targeted medicines will be selected by February of next year with prices to take effect in 2028.
In January, the Centers for Medicare & Medicaid Services (CMS) announced the second list of drugs, which included obesity mega-blockbusters, Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound. Those prices will take effect on January 1, 2027. Negotiations for the list ended in August 2024.
Fifteen new drugs will be added in the next negotiations. The drugs with the most Medicare revenue exposure flagged by Leerink are Merck’s Keytruda and Bristol Myers Squibb’s Opdivo, as well as Gilead’s HIV-antiretroviral Biktarvy. For the first two, the companies are gearing up to lose exclusivity in 2028 anyway, whereas Gilead still enjoys patent protection through 2033.
The IRA is not the only pricing pressure facing pharma. President Donald Trump has issued a sweeping executive order that attempts to use existing levers of government to force pharma companies to come to the table and set prices in line with other nations where drugs are cheaper. The list of drugs that will be subject has not been issued, but the Department of Health and Human Services recently clarified that it will be targeting branded drugs. GLP-1 weight loss medicines have also been flagged, just as CMS dropped them from coverage.
Looking at the IRA’s 2028 list, Leerink notes that smaller companies will bear the brunt after initially being excluded from negotiations. Neurocrine Biosciences’ tardive dyskinesia drug Ingrezza, BeiGene’s lymphoma therapy Brukinsa and Incyte’s polycythemia vera treatment Jakafi are all likely to come up for negotiations. While the first two have exclusivity extending into 2033, Jakafi will lose patent protection in 2028, meaning investors will likely shrug off its inclusion in negotiations, Leerink noted.
Leerink expects that CMS will push for steeper reductions than the 22% achieved for 2026.
One stubborn issue that remains a sticking point for pharma is that the so-called “pill penalty” remains despite an executive order from President Donald Trump calling for its repeal. This provision of the IRA penalizes small molecule drugs by providing a longer 13-year exclusivity period to biologics, compared to nine years for small molecules. Notably, changes to the pill penalty did not make it into Trump’s sweeping tax reform bill, dubbed the One Big Beautiful Bill Act, which passed through the House of Representatives last week.
