Which drugs may be hit with negotiations if the reconciliation bill passes? Wall St. analysts explain
Beyond the back and forth of whether Democrats’ drug price negotiation plan is necessary to bring down costs, or just a thinly veiled attempt at price controls, the nuts and bolts of the deal mean pharma companies will inevitably see the tail ends of certain small molecule and biologic sales peter out before they otherwise would have in today’s marketplace.
While the bill’s text is not set in stone, and the Senate parliamentarian may still take issue with the excise tax that CMS will use to ensure companies comply with the negotiated prices, SVB Securities explained to investors how more than a dozen drugs from Eli Lilly, AstraZeneca, AbbVie and J&J, among others, would lose out on some revenue just before their generic competitors hit the market.
If Senate Democrats can rally every last member before next Friday, and the House pulls it together sometime next month, CMS negotiations for drug prices would begin in 2026, but only for 10 Part D drugs (i.e. outpatient drugs) to start. In 2028, Medicare would set prices for both Part D and Part B (physician-administered) drugs. Cumulatively, CMS may end up negotiating about 60 drugs, depending on generic/biosimilar competition, SVB Securities analysts wrote.
While negotiations won’t begin until small molecules are nine years past their approvals, or 13 years for biologics, SVB Securities warns that “innovators’ willingness to develop new drugs, in particular small molecule therapies for seniors, would likely diminish.”
Drugs like Vertex’s cystic fibrosis treatment Trikafta could end up seeing nine years cut off from its exclusivity period, although the analysts note that that may not add up to much because most of those who are on the drug are not on Medicare. For J&J’s cancer drug Darzalex, eight years might be cut off by the negotiations, and “a very high percentage of sales” are from Medicare given its multiple myeloma indication.
But other companies, like Merck, won’t be too exposed to the negotiations as its megablockbuster cancer drug Keytruda faces biosimilar entry in 2028, which is the first year for Part B negotiations.
As lobbying over the final bill text hits a fever pitch over the next week, more and more reports on what the bill will do are piling up.
Avalere Health, for instance, recently estimated, thanks to a Gilead-funded report, that the legislation “could reduce manufacturer revenues by $165 billion in Part D and $290 billion in Part B from 2026 to 2032.” And while it’s unlikely the excise tax would be used (because of how steep it is), Avalere projected that its estimated impact on manufacturers’ non-compliance could be as high as 1,450% of total Part D spend and about 2,500% of Part B spend.
