CMS Announces New Drug Prices Under the IRA, Including for Stelara and Enbrel

Last week, CMS announced the new negotiated prices for the 10 drugs selected under the Inflation Reduction Act (IRA), including Stelara (ustekinumab) and Enbrel (etanercept), which are expected to face biosimilar competition in the next few years.¹

The full list of chosen drugs includes apixaban (Eliquis), empagliflozin (Jardiance), rivaroxaban (Xarelto), sitagliptin (Januvia), dapagliflozin (Farxiga), sacubitril/valsartan (Entresto), etanercept, ibrutinib (Imbruvica), ustekinumab, and insulin aspart (Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, NovoLog PenFill).² The first 10 drugs accounted for about one-fifth of total Part D–covered prescription drug costs from June 1, 2022, and May 31, 2022, generating approximately $50.5 billion in costs.

The discounts for Medicare patients ranged from 53% (Entresto) to 79% (Januvia) from the medications’ original list prices.³ Stelara will experience a 66% discount, with a negotiated price of $4695, and Enbrel will see a 67% discount, with a price of $2335.

The IRA was signed into law by President Joe Biden in August 2022 after contentious votes in the Senate and House of Representatives. As required by the IRA, price negotiations between Medicare Part D plans and pharmaceutical companies took place in 2023. | Image credit: Andrii - stock.adobe.com

More on the IRA and Chosen Drugs

Negotiated prices will go into effect on January 1, 2026.² CMS will also select up to 15 additional drugs for which Part D negotiations will occur for 2027, up to 15 more for 2028 (including both Part B and Part D), and up to 20 more drugs for each subsequent year.

The IRA was signed into law by President Joe Biden in August 2022 after contentious votes in the Senate and House of Representatives. As required by the IRA, price negotiations between Medicare Part D plans and pharmaceutical companies took place in 2023. Price negotiations will be implemented in phases. Drugs eligible for negotiation must be high-expenditure, single-source medicines without generic or biosimilar competition for the next 2 years after publication of the selected drug list.

Although there are 2 FDA-approved biosimilars for Enbrel and 3 for Stelara, neither drug has biosimilars currently on the market.^4,5 The chosen drugs must also have been on the market for over 9 years for small molecules and over 13 years for biologics.

Etanercept biosimilars are expected to launch in 2029 and ustekinumab biosimilars have been delayed from 2023 to 2025 after biosimilar manufacturers settled patent litigation suits with the originator manufacturer, Janssen.^6,7 Additionally, while the European Union has 3 insulin aspart biosimilars on the market, the United States has none.

Industry Reactions

Reactions to the new prices were mixed, with some groups, such as the Senate Finance Committee, welcoming the negotiated prices. Committee Chair Ron Wyden (D, Oregon) highlighted that these reduced prescription drug prices for Medicare beneficiaries will save older patients money at the pharmacy and signify a shift in the relationship between taxpayers, patients needing affordable medication, and pharmaceutical companies.⁸

Similarly, the American College of Rheumatology (ACR) praised CMS for the negotiated prices, particularly for etanercept and ustekinumab—drugs commonly used for rheumatic diseases.⁹ ACR president Deborah Dyett Desir, MD, emphasized that CMS's efforts to lower out-of-pocket costs will help prevent Medicare beneficiaries from skipping or delaying treatments, which can lead to disease progression and permanent harm.

Juliana M. Reed, executive director of the Biosimilars Forum, expressed concern that CMS is misinterpreting the Biosimilar Special Rule of the IRA by including drugs with imminent biosimilar competition in its price negotiations.¹⁰ She emphasized that Congress intended to exempt such products to promote free-market competition and lower drug prices for patients. Reed urged CMS to align its guidance with Congressional intent to ensure access to lower-cost biosimilars and highlighted the potential for biosimilars to save the US health care system up to $133 billion by next year.

The Association for Accessible Medicines, representing generic and biosimilar manufacturers, responded to HHS’ recent fact sheet from CMS about cost savings from newly negotiated pricing for 10 brand-name drugs.¹¹

David Gaugh, interim president and CEO of AAM, criticized the announcement, stating, “CMS projects average savings of 22 percent on these selected brand pharmaceuticals, a figure that pales in comparison to typical savings from generics and biosimilars… The data is clear: generic and biosimilar competition is the best way to deliver low-cost drugs for patients and taxpayers. The uncertainty created by the IRA harms generic and biosimilar competition. We call on policymakers to address patent thickets, PBM brand drug rebates, and other root causes that delay generic and biosimilar competition, rather than doubling down on government price setting.”

The National Pharmaceutical Council expressed concerns about the impact of the negotiated prices, with president and CEO John M. O'Brien, PharmD, MPH, stating that the effect on patients at the pharmacy counter is unclear.¹² He criticized CMS for not disclosing the evidence used in negotiations or how it plans to protect patient access and out-of-pocket spending, warning that these actions could influence market dynamics and investment in new medicines.

Likewise, the Pharmaceutical Research and Manufacturers of America (PhRMA) argued that patients might be "disappointed," as the IRA does not address pharmacy benefit managers (PBMs) or insurance companies that control drug coverage and pricing.¹³ PhRMA President and CEO Steve Ubl highlighted that Medicare Part D options are dwindling with rising premiums, while PBMs and insurers plan to impose more coverage restrictions, potentially leading to higher costs for over 3 million beneficiaries in 2026. He also noted that pharmaceutical companies are altering their research programs due to the IRA, which could result in fewer treatments for conditions like mental health, cancer, and rare diseases.

References

1. Negotiating for lower drug prices works, saves billions. CMS. August 15, 2024. Accessed August 19, 2024. https://www.cms.gov/newsroom/press-releases/negotiating-lower-drug-prices-works-saves-billions

2. Jeremias S. Stelara and Enbrel chosen for IRA price negotiation. The Center for Biosimilars^®. August 29, 2023. Accessed August 19, 2024. https://www.centerforbiosimilars.com/view/stelara-and-enbrel-chosen-for-ira-price-negotiation

3. Santoro C. Lower drug prices announced under Medicare negotiation program. The American Journal of Managed Care^®. August 15, 2024. Accessed August 19, 2024. https://www.ajmc.com/view/lower-drug-prices-announced-under-medicare-negotiation-program

4. Biosimilar approvals. The Center for Biosimilars. Updated March 22, 2024. Accessed August 19, 2024. https://www.centerforbiosimilars.com/biosimilar-approvals

5. Jeremias S. FDA approves Samsung Bioepis’ Pyzchiva, a biosimilar to Stelara. The Center for Biosimilars. July 1, 2024. Accessed August 19, 2024. https://www.centerforbiosimilars.com/view/fda-approves-samsung-bioepis-pyzchiva-a-biosimilar-to-stelara

6. Jeremias S. NJ court decision means 3 decades of product exclusivity for Enbrel. The Center for Biosimilars. December 1, 2021. Accessed August 19. 2024. https://www.centerforbiosimilars.com/view/nj-court-decision-means-3-decades-of-product-exclusivity-for-enbrel

7. Jeremias S. Amgen’s Stelara biosimilar delayed until 2025 after settling with J&J. The Center for Biosimilars. May 29, 2024. Accessed August 19, 2024. https://www.centerforbiosimilars.com/view/amgen-s-stelara-biosimilar-delayed-until-2025-after-settling-with-j-j

8. Wyden cheers lower drug prices for seniors through Medicare negotiation. US Senate Committee on Finance. August 15, 2024. Accessed August 19, 2024. https://www.finance.senate.gov/chairmans-news/wyden-cheers-lower-drug-prices-for-seniors-through-medicare-negotiation

9. ACR applauds lower negotiated prices for arthritis drugs. American College of Rheumatology. August 15, 2024. Accessed August 19, 2024. https://rheumatology.org/press-releases/american-college-of-rheumatology-applauds-lower-negotiated-prices-for-common-arthritis-drugs

10. Biosimilars Forum calls on CMS to support lower-cost biosimilars and increase access for patients. Biosimilars Forum. Press release. August 15, 2024. Accessed August 19, 2024. https://biosimilarsforum.org/2024/08/15/biosimilars-forum-calls-on-cms-to-support-lower-cost-biosimilars-and-increase-access-for-patients/

11. Benefit projected by CMS price setting cannot compare to benefit of generic and biosimilar medicines. Association for Accessible Medicines. Press release. August 15, 2024. Accessed August 19, 2024. https://accessiblemeds.org/resources/press-releases/cms-projected-benefit-vs-generic-biosimilar-medicines

12. IRA & the Medicare Drug Price Negotiation Program. National Pharmaceutical Council. August 15, 2024. Accessed August 19, 2024. https://www.npcnow.org/topics/health-spending/ira-medicare-drug-price-negotiation-program

13. PhRMA statement on government price setting in Medicare Part D. Pharmaceutical Research and Manufacturers of America. August 14, 2024. Accessed August 19, 2024. https://phrma.org/resource-center/Topics/Medicare/PhRMA-Statement-on-Government-Price-Setting-in-Medicare-Part-D