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By Patrick Wingrove
(Reuters) – Drugmakers are bracing for the U.S. government’s announcement of the 10 prescription medicines that will be subject to the first-ever price negotiations by the Medicare health program that covers 66 million people, according to three top manufacturers.
The U.S. is expected to publish the list online in about a month, kicking off a process that has already faced multiple legal challenges.
President Joe Biden’s signature Inflation Reduction Act (IRA), signed into law last year, allows Medicare to negotiate prices for some of its most costly drugs. It aims to save $25 billion per year on drug prices by 2031.
The companies and Wall Street have been gaming out which drugs are likely to be chosen to begin the process to set prices that would go into affect in 2026. The minimum cut on list price would be 25%.
Three drugmakers told Reuters they expect Medicare to publish the list on its website without providing a heads up of what would be on it. Two of them said they asked for some advanced notice, but the agency had not answered their questions.
The U.S. Centers for Medicare and Medicaid Services (CMS) declined to comment on the companies’ expressed concerns and its lack of responses.
The Medicare agency has provided criteria for inclusion on the list, such as that a drug is sold in pharmacies, does not have substantial generic competition and has been on the market for at least nine years – 13 for more complex biotech drugs.
U.S. drugmaker Merck & Co expects, based on the agency’s roadmap for the drug price element of the new law, that its diabetes drug Januvia will be included in the first round of negotiations.
“There’s been no indication by them to us – or anyone else – what specific drugs will be included,” said Merck CEO Rob Davis in an interview.
After publication of the list, which drugmakers expect will come on or near Medicare’s Sept. 1 deadline, manufacturers will have 30 days to submit data on their medicines and sign agreements to participate in the talks.
That data will include research and development and production costs, information on patent applications and revenue and sales volume data on the selected drugs.
The companies have sent letters to CMS saying that 30 days is an unreasonably short time to expect them to turn around drug data the government will use to determine maximum fair prices for those medicines, and that advanced notice would help them prepare.
Drugmakers argue that the law will hurt innovation and that it violates their rights under the First, Fifth and Eighth amendments of the U.S. Constitution. Four drug companies and two industry associations have filed separate but similar lawsuits in multiple courts.
In their lawsuits, Bristol Myers (NYSE:) Squibb, Johnson & Johnson (NYSE:) and Astellas Pharma said they expect to have drugs on the government’s list this September.
AbbVie (NYSE:) said during a conference call last week that it was looking closely at its big-selling cancer drug Imbruvica being included.