Wall Street concerns about the Anti-Inflation Act’s price negotiations for the first 10 drugs in Medicare Part D plans appear to be fading. Why? As the Sept. 1 rollout date approaches, executives at Big Pharma are signaling that they can get the federal government to control price increases.
On earnings calls over the past few weeks, several major pharmaceutical companies have spoken about final price agreements they have reached with the Centers for Medicare and Medicaid Services (CMS) without disclosing figures.
Bristol-Myers Squibb’s (BMY) blockbuster blood thinner Eliquis is also on the list. The company confirmed that it received the highest fair value from CMS and that it can manage the impact on earnings. “Now that we know the final price, we are increasingly confident in our ability to navigate the IRA impact on Eliquis,” CEO Christopher Boehner said on Friday’s earnings call.
Eliquis brought in $3.4 billion in revenue for the company in the second quarter, up 7% from a year ago, and will contribute $12.2 billion, or nearly a quarter, of BMS’ $45 billion in revenue in 2023.
No worries: A Johnson & Johnson office building in Irvine, California (REUTERS/Mike Blake/File Photo) (REUTERS/Reuters)
Last week, Johnson & Johnson (JNJ) also faced questions from analysts during its earnings conference call about the impact of the IRA on its drugs, the immunosuppressant Stelara and the blood thinner Xarelto. Jennifer Taubert, executive vice president and worldwide chair of Innovative Medicines, said the company is opposed to the process, but that J&J won’t need to change its guidance once prices are known.
“Those numbers were included in the guidance that we provided. They still look very good to us today. They’re very consistent today,” she said.
Stelara, which is off patent next year, had second-quarter sales of nearly $2.9 billion, up 4.9% from 2018, while Xarelto sales were $587 million, down 7.9% from 2018. The two drugs could bring in combined revenue of $13.2 billion in 2023, but Xarelto sales declined year over year.
Both BMS and J&J sued the government, arguing that the IRA mandate was unconstitutional. The lawsuits were dismissed in court and the companies have said they will appeal.
The real bottom line? Investors are rejoicing. “Taken together, these factors suggest a more reasonable discount than feared around IRAs,” JPM analyst Chris Schott said in a Friday note.
Anjali Khemrani is a senior health reporter at Yahoo Finance, covering everything from pharma, insurance, long-term care services, digital health, PBMs, health policy and politics, etc. Follow Anjali on all social media platforms. translation:.
The story continues
For the latest earnings reports and analysis, earnings rumours and forecasts, and company earnings news, click here.
Read the latest financial and business news from Yahoo Finance