Inflation Reduction Act: Patients sigh relief but confusion for biosimilar manufacturers

The Inflation Reduction Act of 2022 (IRA) was signed into law in the United States in August 2022 to enable government to set prices for any prescription drugs covered by Medicare. Prior to this, Medicare drug pricing was left to the drug manufacturers, pharmacies, and insurance plan sponsors and the government was prevented from interfering in the private price negotiations.

Under IRA, overpriced, “single-source” drugs i.e. blockbuster drugs without generic or biosimilar competition for a certain number of years, will be considered by the government to determine the “maximum fair price” in the Drug Price Negotiation Program¹. In effect, the Maximum Fair Price (MFP) should not be more than 40-75% (depending on how long the product has enjoyed market exclusivity without generic or biosimilar competition) of what the drug’s average manufacturer price was in the year 2021².

On 29th August, Secretary of Health and Human Services (HHS) announced the list of ten drugs that will be included in the maiden year of this program³. The list includes:

1. Eliquis^® (Apixaban, Bristol Myers Squibb)

2. Jardiance^® (Empagliflozin, Boehringer Ingelheim)

3. Xarelto^® (Rivaroxaban, Janssen Pharms)

4. Januvia^® (Sitagliptin phosphate, Merck Sharp Dohme)

5. Farxiga^® (Dapagliflozin, AstraZeneca AB)

6. Entresto^® (Sacubitril; valsartan, Novartis Pharms Corp)

7. Enbrel^® (Etanercept, Immunex)

8. Imbruvica^® (Ibrutinib, Pharmacyclics LLC)

9. Stelara^® (Ustekinumab, Centocor Ortho Biotech Inc., Janssen Biotech)

10. Fiasp^®; Fiasp^® FlexTouch^®; Fiasp^® PenFill^® (Insulin aspart, Novo); NovoLog^®; NovoLog^® FlexPen^®; NovoLog^® PenFill^® (Insulin aspart recombinant, Novo Nordisk Inc.)

3 biologics and 7 small molecules comprise this list.

Given the biosimilars of Stelara^® will be launched in the market on or before January 1, 2025 (within two years from the publication of HHS drugs list on 29^th August 2023), the first being Amgen’s ABP 654, wondering what prevented Janssen from submitting a request to delay the drug’s inclusion in the program or did Centers for Medicare & Medicaid Services (CMS) not find the biosimilar competition “meaningful” enough to exclude it from the list despite Janssen’s request for delay?

A detailed guidance from CMS on “meaningful competition” can help both the drug sponsors and biosimilar manufacturers in understanding the terms better and preventing the biosimilar manufacturers to get deterred from bringing the biosimilars in the market as the negotiated price for the reference listed drug (RLD) can erode a significant market share for the biosimilar.

References:

1. https://www.cms.gov/files/document/fact-sheet-medicare-selected-drug-negotiation-list-ipay-2026.pdf
2. https://www.bigmoleculewatch.com/2023/08/25/first-drugs-selected-for-price-negotiations-under-the-inflation-reduction-act-to-be-announced-next-week-a-recap-of-what-that-means-the-drug-price-negotiation-program-and-pending-legal-challenges/#:~:text=In%20effect%2C%20the%20Maximum%20Fair,was%20in%20the%20year%202021.
3. https://www.hhs.gov/about/news/2023/08/29/hhs-selects-the-first-drugs-for-medicare-drug-price-negotiation.html