Four major pharmaceutical companies involved in the first U.S. negotiations over Medicare drug prices expect limited business impact despite anticipated price cuts.
Bristol Myers Squibb & Co (NYSE:BMY), Johnson & Johnson (NYSE:JNJ), AbbVie Inc (NYSE:ABBV), and AstraZeneca Plc (NASDAQ:AZN) expressed this outlook after reviewing confidential government pricing set to take effect in 2026.
Reuters noted that executives shared their perspectives during recent quarterly conference calls.
Related: Medicare's Ambitious Drug Price Negotiation Plan: President Joe Biden Calls To Expand Targeted Medicines To 50 Annually by 2029.
The Medicare program, covering 66 million Americans aged 65 and older or with disabilities, spends billions annually on medications.
It plans to cut drug list prices by at least 25% in 2026, with official announcements expected by Sept. 1.
"I think the drugmakers were frightened (these prices) would be a big deal. But now, the ones who have reported or commented have actually said it seems to be OK and in line with expectations," Reuters noted, citing a UBS analyst's interview.
Under President Joe Biden's 2022 Inflation Reduction Act, the Medicare agency identified the 100 most expensive drugs and selected 10 for price negotiations.
Chris Boerner, CEO of Bristol Myers, expressed confidence in navigating the impact on the blood thinner Eliquis, co-marketed with Pfizer Inc (NYSE:PFE).
However, he and Robert Michael, CEO of AbbVie, reiterated concerns about government "price setting" potentially stifling innovation.
The IRA empowers Medicare to negotiate prices for costly drugs, potentially leading to price cuts ranging from the statutory minimum of 25% to a significant 60%.
AbbVie CEO Michael confirmed that the anticipated sales impact of its leukemia drug Imbruvica has been factored into its forecasts, while Jennifer Taubert, a J&J executive, maintained a positive long-term growth outlook despite the expected discounts for Stelara and Xarelto.
Citing an analyst at J.P. Morgan, Reuters noted that the responses from Bristol Myers and J&J indicate more manageable price cuts than initially feared.
An AstraZeneca executive indicated that minimal impact is expected by the time new prices take effect due to competition from generic versions of its diabetes drug Farxiga.
Guggenheim Partners analyst added that other drugs on the initial list, including Merck & Co Inc's (NYSE:MRK) Januvia and Amgen Inc's (NASDAQ:AMGN) Enbrel, are also expected to face generic competition by 2029.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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