Big Pharma Presses Trump Team to Relax Medicare Drug Price Negotiation Rules By Reuters

By Michael Erman, Patrick Wingrove and Maggie Fick

NEW YORK (Reuters) – The U.S. pharmaceutical industry is pushing to renew a new law that allows Medicare to negotiate prices for its most expensive prescription drugs once President-elect Donald Trump returns to power, according to lobbyists, executives, analysts and experts. in health care policies. .

Seven lobbyists and executives working with major pharmaceutical and biotech companies told Reuters they are pushing to delay by four years the timeline under which drugs are eligible for price negotiations for small molecule drugs, which are primarily pills. and represent the majority of medications.

Two sources said the industry is already speaking directly with members of Trump's transition team.

Medicare's ability for the first time to directly negotiate prices for select drugs was part of the Inflation Reduction Act, considered one of the key achievements of outgoing President Joe Biden's administration. Medicare covers 66 million Americans, mostly ages 65 and older.

Since the IRA passed in 2022, drugmakers have complained about the terms of Medicare's bargaining powers, saying it would stifle innovation. The government says drug price negotiations will save nearly $25 billion by 2031.

In particular, the industry has opposed the eligibility negotiation deadline for most drugs. When drugs do not have competition, the law allows the government to negotiate prices for complex biological or biotech drugs after 13 years on the market, but after 9 years for drugs taken in pill and capsule form.

Pharmaceutical companies have said this will discourage them from developing drugs that are generally cheaper, easier to produce and more convenient for patients, and instead push them to prioritize research into biologics, which are often administered by infusion into instead of taking at home.

However, four drugmakers involved in the first U.S. Medicare negotiations assured analysts and investors earlier this year that they did not expect a significant impact on their businesses after seeing the government's suggested pricing set to take effect in 2026.

S. Sean Tu, a law professor at West Virginia University, called 13 years of market exclusivity for all drugs “a terrible idea,” adding that drugmakers would have enough financial incentives to innovate just by five years on the market.

Agreeing to extend the time for potential price negotiations from 9 to 13 years is “simply giving the pharmaceutical industry a huge boon with no return,” he said.

WAITING FOR THE REPUBLICANS

A source at a major pharmaceutical company said the company had phone calls and in-person meetings with members of Trump's transition team to discuss possible changes to the IRA.

The company hopes that a Republican Congress and the Trump administration will eliminate the distinction in how easier-to-produce drugs are treated.

“They have been receptive,” the source said, declining to say who the company had spoken to on the transition team.

Trump's transition team did not respond to a request for comment.

Trump nominated industry critic Robert F. Kennedy Jr to be secretary of the US Department of Health and Human Services, which includes the agency that oversees Medicare and these negotiations.

Drugmakers are betting that Republican lawmakers and the Trump administration will be more open to changing the IRA. A pharmaceutical company executive, who spoke on condition of anonymity, said Republicans are also concerned that the law would hinder the development of non-biotech drugs.

“I think there's a growing recognition that there are unintended consequences” of the IRA among Republicans, said another pharmaceutical company executive, speaking on condition of anonymity. “That's not just wishful thinking.”

Pharma hopes to take advantage of Republican moves to eliminate some of the legislation's green and energy subsidy provisions, three of the sources said.

In the first round of price negotiations, the Biden Administration cut by up to 79% what it will pay for 10 widely used prescription drugs under Medicare. It is estimated that the measure will reduce revenue from these drugs by billions of dollars, of which only three are biotechnological drugs.

In addition to oral medications, injectable medications like Ozempic, Novo Nordisk's (NYSE:) diabetes treatment, are considered small molecule medications and are subject to a shorter time to market 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 hope 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 have the majority next year.

A complete repeal of drug price negotiations is unlikely, four executives and industry experts acknowledged.

BMO analyst Evan Seigerman suggested Kennedy could be an impediment to drugmakers' plans to change the law.

“Who knows if they can make that happen?” he said. “I don't think RFK is very industry-friendly.”