The Inflation Reduction Act and Negotiated Drug Prices

The Inflation Reduction Act and Negotiated Drug Prices

The Inflation Reduction Act authorized the federal government to negotiate lower prices for certain kinds of medications, enabling the United States to join the ranks of dozens of countries whose governments routinely negotiate costs with pharmaceutical companies. The program will aim to negotiate lower prices for up to 60 drugs covered under Medicare, with an aim towards targeting the ones that account for the highest levels of spending and where no alternatives are available.

On Tuesday, the Biden Administration announced the first 10 drugs whose prices will be negotiated: diabetes drugs Jardiance, Januvia, Fiasp and NovoLog; chronic kidney disease drug Farxiga; stroke and blood clot medications Eliquis and Xarelto; heart failure medication Entresto for heart failure; blood cancer treatment Imbruvica, Crohn’s disease treatment Stelara and arthritis medication Enbrel.

The new prices will go into effect in 2026, but the impact of at least the first 10 drugs may not be major. A research report from Jefferies finds that many of the drugs selected will already have generics available by the end of the decade, which includes both small molecules and some of the biologicals. Stelara and Xalreto, both have generics expected to enter the market in 2025, which would mean price negotiations for them might not happen. The Jefferies researchers also note that the negotiation provisions of the Inflation Reduction Act are currently the subject of lawsuits, which may delay or prevent the implementation of any lower drug costs. (Several Trump Administration efforts to lower prescription drug costs were blocked by federal courts, for example.) Overall, the report suggests there will be an impact of less than $19 billion total from 2026 through the end of the decade. A drop in the bucket compared to the over $335 billion Americans spent on prescription drugs every year.

Other Healthcare News:

• Antheia’s Breakthrough in Drug Ingredient Production

  Backed by $120 million in venture funding, Stanford professor Christina Smolke’s company Antheia just completed its first commercial-scale production of a key drug ingredient, thebaine, which is used in pain management and addiction management medications. The company is aiming to go to market in 2024 and has a pipeline of over 70 ingredients it’s planning to manufacture with bioengineered yeast.

• Protein Folding Startup Raises $40 Million

  EvolutionaryScale, a startup run by several ex-employees from Meta’s AI protein-folding team, has raised a $40 million round led by Lux Capital at a $200 million valuation.

• Collaboration for CAR-T Therapies

  Biotech company Celularity announced a multi-year research collaboration with Regeneron, with an initial focus on CAR-T therapies.

• Danaher’s Acquisition of Abcam

  Corporate conglomerate Danaher will be acquiring life sciences research firm Abcam for $5.5 billion.

• FDA Clearance for Baroguard System

  The FDA has cleared the Baroguard system, developed by Paragonix Technologies, for use in the transportation of lungs for transplant.

• Huma Therapeutics’ Collaboration with Google Cloud

  Digital health company Huma Therapeutics is collaborating with Google Cloud to use generative AI tools on its disease management platform.

• Raised Funding for Medication Management

  PatchRx, which has developed a smart cap for prescription drug bottles to monitor adherence, has raised an $8 million series A round led by Atento Capital.

• Expansion of Healthcare-Focused Language Model

  Google announced that it’s expanding customer access to its healthcare-focused large language model Med-PaLM 2, aiming to compete with Amazon and Microsoft.

• Novo Nordisk’s Plans for Weight-Loss Drug

  Novo Nordisk plans to launch its weight-loss drug Wegovy in more countries, despite shortages caused by booming demand for the drug.

• Improved Health Outcomes with Fresh Produce

  Research shows that Americans who are assisted in buying fresh produce demonstrated improved health outcomes when ordered by their doctors to eat more fruits and vegetables.

• Spending Increase on Mental Health Services

  Spending on mental health services leaped over 50% in the early years of the pandemic among Americans with private insurance.

• Cigna’s Obamacare Expansion and Reduction

  Cigna plans to grow its business of selling individual coverage under the Affordable Care Act in 15 new counties in North Carolina but will leave Missouri and Kansas, slightly reducing its Obamacare footprint.

• Gut Microbes for Diagnosing and Treating Conditions

  Researchers have discovered gut microbes that could one day be harnessed to help diagnose, prevent, and treat conditions like obesity, prediabetes, and type 2 diabetes.

• Sale of British Hospital Operator by Centene

  Health insurer Centene will sell a British hospital operator for $1.2 billion as it plans to focus on its core U.S. health benefits businesses: Obamacare, Medicaid, and Medicare Advantage.

Other Headlines:

• Better.com CEO Who Fired 900 People On Zoom Is Struggling To Keep His Company Afloat
• Kids Of Alumni Get Special Treatment At 80% Of America’s Top Private Colleges
• As TikTok Ban Looms, ByteDance Battles Oracle For Control Of Its Algorithm
• PacBio, once slated to be acquired by Illumina, is taking on the DNA giant (Endpoints)
• This is how space might disturb our immune systems (Popular Science)
• How Multiple Warnings About a Killer Nurse Went Unheeded (New York Times)