White House officials Tuesday named the first 10 high-cost drugs that will be subject to price negotiations between Medicare and their manufacturers, stepping up a campaign to rein in prescription medicine costs in the face of industry pushback.
The initial group of drugs targeted for the high-stakes haggling, allowed under last year’s landmark Inflation Reduction Act, treat illnesses and medical conditions, such as diabetes, blood clotting, arthritis, and kidney disease, that afflict millions of people and are major drains on the budget of Medicare, which provides health insurance to older Americans.
None of the 10 therapies initially tagged for price talks are sold by companies based in Massachusetts, a top biopharma hub that is better known for making complex biologic drugs to treat rare genetic disorders. Those drugs, while expensive, treat smaller numbers of patients.
But a half-dozen of the drug makers that will be bargaining with Medicare, including Big Pharma stalwarts Bristol Myers Squibb, Pfizer, Merck, Novartis, Amgen, and AbbVie, have large operations in the state and employ thousands of scientists and researchers here.
Among the medicines in the Biden administration’s cross-hairs are Eliquis, for preventing strokes and blood clots, sold by Bristol Myers and Pfizer; Jardiance, for Type 2 diabetes and heart failure, sold by Boehringer Ingelheim and Eli Lilly; Xarelto, for preventing strokes and blood clots, sold by Johnson & Johnson; Januvia, for Type 2 diabetes, sold by Merck; and, Farxiga, for chronic kidney disease, sold by AstraZeneca.
Others on the negotiating list are Entresto, for heart failure, sold by Novartis; Enbrel, for arthritis and other autoimmune conditions, sold by Amgen; Imbruvica, for blood cancers, sold by AbbVie and Johnson & Johnson; Stelara, for Crohn’s disease, sold by Johnson & Johnson; and, insulin products Fiasp and NovoLog, for diabetes, sold by Novo Nordisk.
At a White House event Tuesday, President Biden spotlighted his push to tamp down drug costs. “We’re going to keep standing up to Big Pharma, and we’re not gonna back down,” he said. “Negotiating drug prices . . . isn’t just going to put more money in the pockets of millions of Americans across the country, it’s also going to lower the federal deficit.”
Biden’s drug price relief law and the start of Medicare’s first-time bargaining with drug makers are expected to save the government and American consumers tens of billions of dollars over time. They’re sparking differing reactions among advocates for Massachusetts seniors and the hundreds of companies that develop medicines here.
The state’s biopharma industry has stayed on the sidelines over the past year as a parade of drug giants based outside Massachusetts joined with the US Chamber of Commerce in filing lawsuits, contending the price negotiations permitted by the new law are unconstitutional.
But biopharma leaders in Massachusetts have mounting concern that the Medicare negotiations and other measures to hold down costs have the potential to dampen state drug makers’ ability to raise money for research, expand their product pipelines, and hire workers.
“The drug price negotiation program, as enacted, will negatively impact drug discovery and innovation and ultimately patients around the world, and that’s why we are supportive of current litigation,” said Kendalle Burlin O’Connell, chief executive of MassBio, a trade and lobbying group. “MassBio is watching this like a hawk.”
At the same time, the state’s leading lobby for seniors is celebrating the prospect of lower drug prices for older resident on fixed incomes.
“This will finally bring much needed relief to American families, and particularly older adults,” said Jessica Costantino, director of advocacy for AARP Massachusetts, which represents more than 1.2 million state residents ages 65 and over. “We can’t allow Big Pharma to use as their cash machine seniors who really need these drugs.”
Many on both sides view the drug price reform law as the opening salvo in a larger push to make medicines more affordable. Follow-on measures in bills introduced in the House by Representative Richard Neal, a Springfield Democrat, and in the Senate by Democratic Senators Amy Klobuchar of Minnesota and Peter Welch of Vermont, would extend price negotiations to more drugs and let commercial insurers piggyback on the prices Medicare charges.
More than 70 groups representing consumers and older Americans have petitioned drug makers to drop their lawsuits against the new law, calling on the Biden administration to expand its efforts to bring down drug prices by, among other things, breaking up biopharma monopolies.
And in a letter Monday to the Food and Drug Administration commissioner, Senator Elizabeth Warren, a Massachusetts Democrat, and Representative Pramila Jayapal, a Democrat from Washington, called for closing loopholes that keep drug prices high by blocking lower-cost generic medicines from entering the market.
“This is a watershed moment in the push for affordability,” said Peter Maybarduk, access to medicines director for consumer advocacy group Public Citizen. “This is the beginning, but not the end. We should be taking a fresh look at what a fair price is for these drugs.”
But the impact of the crackdown on drug prices is being closely watched in Massachusetts. Biopharma companies rely on the profits from approved medicines to fund experimental therapies in their labs. The investors who bankroll biotech startups, including venture capital firms and larger drug companies, seek payoffs for funding risky bets.
British-based AstraZeneca, which last week became the sixth drug maker to challenge the US drug price law, operates Alexion, a rare disease subsidiary, from Boston. Most other global pharma players conduct research or have other operations in Massachusetts.
Earlier this summer, the top executive at Cambridge’s Biogen said he would look into contesting provisions in the new drug price law, though the company has yet to do so. Anylam, another Cambridge biotech, scrapped plans for a clinical trial for a rare eye disease treatment last year, citing worries over how much it might be allowed to charge.
While drug price negotiations are the highest profile cost-savings measure in the Inflation Reduction Act, they’re not the only one. The law also caps out-of-pocket spending on insulin at $35 per month for Medicare recipients. Starting in 2025, it will cap total prescription drug costs for Medicare recipients, at $2,000 a year.
The impact of the measures may not be felt right away, but they’re likely to weaken the state’s entire biopharma ecosystem of biotechs, pharmaceutical companies, and hospital and academic research over time, said William Smith, senior fellow and director of the life sciences initiative at the Pioneer Institute, a free-market think tank.
Smith said the industry belt-tightening will hurt businesses from the construction industry to sandwich shops located near biotech hubs, but especially the work done in the state’s drug research labs.
“There’s a great deal of nervousness in the life sciences sector,” Smith said. “This is a research-intensive industry. If you take billions of dollars out of research and development, that’s going to cancel a lot of [drug] projects, a lot of licensing agreements, a lot of drug development.”
Robert Weisman can be reached at email@example.com.