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Pharma seeks more time before most drugs are eligible for

Medicare price negotiations

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Industry says current negotiation terms would stifle

innovation

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Republicans seen as allies in altering Inflation Reduction

Act

By Michael Erman, Patrick Wingrove and Maggie Fick

NEW YORK, Nov 27 (Reuters) - The U.S. pharmaceutical

industry is pushing to revamp the new law that allows Medicare

to negotiate prices for its costliest prescription drugs once

president-elect Donald Trump is back in office, according to

lobbyists, executives, analysts and healthcare policy experts.

Seven lobbyists and executives who work with top

pharmaceutical and biotech companies told Reuters they are

pushing to delay the timeline under which medications become

eligible for price negotiations by four years for small molecule

drugs, which are primarily pills and account for most

medicines.

Two sources said the industry is already speaking directly

with members of the Trump transition team.

The ability of Medicare for the first time to directly

negotiate prices on selected medicines was part of the Inflation

Reduction Act, considered one of the key achievements of the

administration of outgoing President Joe Biden. Medicare covers

66 million Americans, mostly aged 65 and older.

Since the IRA was passed in 2022, drugmakers have complained

about the terms of Medicare's negotiating powers, saying it

would stifle innovation. The government says the drug price

negotiations will save nearly $25 billion by 2031.

In particular, the industry has opposed the time frame for

negotiation eligibility for most drugs. When drugs have no

competition, the law allows the government to negotiate prices

for complex biologic, or biotech, drugs after 13 years on the

market, but after 9 years for drugs taken as pills and capsules.

Drug companies have said this will dissuade them from

developing the medicines that are generally cheaper and easier

to produce and more convenient for patients, and instead push

them to prioritize researching biologics, which are most often

given by infusion rather than taken at home.

Yet four drugmakers involved in the first U.S. Medicare

negotiations reassured analysts and investors earlier this year

that they did not expect a significant impact to their

businesses after seeing suggested prices from the government

that would take effect in 2026.

S. Sean Tu, a professor of law at West Virginia University,

called 13 years of market exclusivity for all drugs "a terrible

idea," adding that drugmakers would have enough financial

incentive to innovate with just five years on the market.

Agreeing to extend the time for possible price negotiations

from 9 to 13 years is "just giving a huge boon to the

pharmaceutical industry with no payback," he said.

WAITING FOR REPUBLICANS

One source at a big pharmaceutical company said the company

had both phone calls and in-person meetings with members of the

Trump transition team to discuss possible changes to the IRA.

The company hopes a Republican Congress and the Trump

administration would remove the distinction in how the easier to

produce drugs are treated.

"They have been receptive," the source said, declining to

say whom the company had spoken to on the transition team.

The Trump transition team did not respond to a request for

comment.

Trump nominated industry critic Robert F. Kennedy Jr as

secretary of the U.S. Department of Health and Human Services,

which includes the agency that oversees Medicare and these

negotiations.

Drugmakers are betting Republican lawmakers and the Trump

administration will be more open to changing the IRA. One drug

company executive, who spoke on the condition of anonymity, said

Republicans were also concerned the law will hinder development

of non-biotech medicines.

"I think there is increasingly a recognition that there are

unintended consequences" of the IRA among Republicans, another

pharmaceutical company executive said, speaking on condition of

anonymity. "That's not just wishful thinking."

Pharma expects to piggyback on Republican moves to scrap

some of the energy and green subsidy provisions in the

legislation, three of the sources said.

In the first round of price negotiations, the Biden

Administration cut what it will pay for 10 prescription drugs

widely used by Medicare by as much as 79%. The move is estimated

to cut revenue on those drugs, just three of which are biotech

medicines, by billions of dollars.

In addition to the oral medications, injectable drugs like

Novo Nordisk's diabetes treatment Ozempic are

considered small molecule drugs and subject to the shorter

market time for negotiated prices. Ozempic, known chemically as

semaglutide, is expected to be selected for the next round of

Medicare negotiations in February, without changes to the law.

The companies expect to address the law through the budget

reconciliation process, one of the industry lobbyists said. That

process only requires a majority of votes in the Senate, rather

than the 60 normally needed, for something to pass, and

Republicans will hold a majority next year.

Full repeal of drug price negotiations is unlikely, four

executives and industry experts acknowledged.

BMO analyst Evan Seigerman suggested Kennedy could be an

impediment to pharma's plans for changing the law.

"Who knows if they can make that happen?," he said. "I don't

think RFK would be very friendly to the industry."