In this photo illustration, Farxiga is made available to customers at the New City Halsted Pharmacy on August 29, 2023 in Chicago, Illinois.
Scott Olson | Getty Images
AstraZeneca, Bristol Myers Squibb and Boehringer Ingelheim on Wednesday told CNBC they will agree to participate in the first round of Medicare drug price negotiations, even after all three drugmakers sued to halt the process last month.
AstraZeneca’s Type 2 diabetes drug Farxiga, Boehringer Ingelheim’s own diabetes drug Jardiance and Bristol Myers Squibb’s blood thinner Eliquis are among the first 10 drugs selected for price talks with Medicare. The three companies appear to be the first manufacturers to indicate that they will comply with the negotiations, which seek to rein in the rising costs of prescription drugs for older Americans.
Manufacturers of the other seven drugs selected have until Oct. 1 to sign an agreement to participate in the process. Those companies did not immediately respond to CNBC’s request for comment about their intentions.
“We remain committed to ensuring patients have access to FARXIGA and plan to participate in the process outlined by CMS to communicate the value of FARXIGA to people covered by Medicare,” AstraZeneca said in a statement to CNBC, referencing the Centers for Medicare and Medicaid Services.
Boehringer Ingelheim, which is privately held, said in a statement it is “committed to engaging in open and transparent conversations” with CMS.
A spokesperson for Bristol Myers Squibb said the company has “no choice other than to sign the ‘agreement.'”
“If we did not sign, we’d be required to pay impossibly high penalties unless we withdraw all of our medicines from Medicare and Medicaid. That is not a real choice,” the spokesperson said.
If drugmakers decline to engage in the negotiations, they could be forced to pay an excise tax of up to 95% of their medication’s U.S. sales or to pull all of their products from the Medicare and Medicaid markets, according to CMS.
Bristol Myers, AstraZeneca, Boehringer Ingelheim and other drugmakers like Johnson & Johnson and Merck have filed at least eight separate lawsuits in recent months seeking to declare the negotiations unconstitutional. Another lawsuit from the Chamber of Commerce, one of the biggest lobbying groups nationwide, is seeking a preliminary injunction, which aims to block the negotiations before Oct. 1.
The pharmaceutical industry fiercely opposes the process because it believes it will threaten its revenue growth, profits and drug innovation. However, analysts expect minimal financial losses for companies, at least initially, since most of the drugs selected already face upcoming patent expirations that will likely weigh on revenue.
For example, Farxiga will lose its market exclusivity in 2026, which will open up the market to generic alternatives. That’s the same year renegotiated prices are set to take effect.
The Inflation Reduction Act, which narrowly passed Congress last year along party lines, empowered Medicare to negotiate drug prices for the first time in the program’s six-decade history. The law is the central pillar in the Biden administration’s efforts to control rising drug prices and was a major victory for the Democratic Party.
The administration named the first round of drugs set to face price talks last month, kicking off a lengthy negotiation process that will end in August 2024.