Trump seeks to alter Medicare drug price negotiations

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After what felt like an infinite streak of bad news, drugmakers finally caught a break last week. 

President Donald Trump issued an executive order that partly targets a key provision of the Inflation Reduction Act that enables Medicare to barter drug prices with manufacturers. He proposed a change that the pharmaceutical industry has long sought.

Within the wide-ranging order, Trump directed Health and Human Services Secretary Robert F. Kennedy Jr. to work with Congress to switch a chunk of the Medicare drug price negotiation rules, which differentiate between small-molecule drugs and biologic medicines.

Currently, the law essentially spares biologics like vaccines from recent negotiated prices for 13 years after they receive U.S. approval, compared with just nine years for small-molecule drugs that are available a pill or tablet form. The industry contends that the discrepancy – or what drugmakers call the “pill penalty” – discourages corporations from investing in the event of small-molecule drugs, that are generally cheaper, easier to fabricate and more convenient for patients to take. 

Trump’s executive order voiced those concerns, saying the discrepancy “threatens to distort innovation.” Lawmakers on either side of the aisle may very well be receptive to the proposed change, especially after some introduced bipartisan laws last 12 months that also seeks to eliminate the difference. 

It could have huge implications for drugmakers, patients and Medicare’s spending on prescribed drugs.

An evaluation from the health policy research organization KFF said the change would mean small-molecule drugs can be in the marketplace longer before they’re eligible for negotiations, which may lead to a rise in Medicare prescription drug spending, higher medication prices and steeper premiums in Medicare Part D plans. 

Changing the law “would come at a value to Medicare and beneficiaries by giving drug corporations 4 additional years of setting their very own prices on these drugs prior to being eligible for negotiation by the federal government, unless combined with other changes to forestall higher spending,” the evaluation said. 

Greater than half of the drugs – 13 out of 25 – in the primary and second rounds of negotiations would have been ineligible on the time they were chosen if the discrepancy between small-molecule treatments and biologics didn’t exist, in response to KFF. Those 13 drugs accounted for about two-thirds of total gross Medicare Part D spending on the 25 treatments, or $61 billion out of $91 billion, KFF said. 

That features the blood thinner Eliquis from Bristol Myers Squibb and Pfizer, in addition to the Type 2 diabetes treatment Jardiance from Eli Lilly and Boehringer Ingelheim. 

Novo Nordisk can be “amongst the most important beneficiaries” if the pill penalty is removed, in response to a Thursday note from TD Cowen analyst Michael Nedelcovych. At the highest of the list of medicine chosen within the second round of talks are the corporate’s blockbuster diabetes injection Ozempic, weight reduction shot Wegovy and diabetes pill Rybelsus, that are considered one product for the sake of the negotiations since all of them share the identical lively ingredient, semaglutide.

Without the so-called pill penalty, Ozempic, Wegovy and Rybelsus wouldn’t be eligible until 2031, which is barely one 12 months before patent expiration within the U.S., Nedelcovych said. 

Trump’s executive order wasn’t all excellent news for pharma. Analysts identified that it contained other proposals that the pharmaceutical industry has strongly opposed. 

For instance, it calls on the Food and Drug Administration to open up a pathway for more drug imports from Canada, where prescription medications are far cheaper. That was a component of Trump’s first-term agenda, and appears to clash together with his planned tariffs on pharmaceuticals. 

In a note on Tuesday, BMO Capital Markets analyst Evan Seigerman added that “we’re also not out of the woods on tariffs, FDA, or the potential for further drug pricing reform.” He’s referring to the large overhaul on the FDA and other federal health agencies under Robert F. Kennedy Jr., who now leads the Department of Health and Human Services. 

“While we’re encouraged with this [executive order,] we’re cautious as to what comes next from the Trump Administration for BioPharma,” Seigerman said. 

We’ll you should definitely cover any of Trump’s other moves, so stay tuned. 

Be happy to send any suggestions, suggestions, story ideas and data to Annika at annikakim.constantino@nbcuni.com.

UnitedHealth Group last week reported a rare earnings and revenue miss for the primary quarter, as medical costs in its Medicare Advantage business weighed on results.

UnitedHealth has navigated the Biden-era reimbursement pressure on Medicare plans higher than its peers over the previous couple of years, but as rivals like Humana and Centene reduce on their footprints this 12 months, UnitedHealth picked up recent members who’ve required quite a bit more outpatient care than expected.In contrast, Elevance Health reported first-quater medical costs below analyst estimates.

Be happy to send any suggestions, suggestions, story ideas and data to Bertha at bertha.coombs@nbcuni.com.

To offer you a way of how the corporate feels about marketing, Epic declared it might replace all of its developers with marketing staff as an April Fools’ prank one 12 months.

“During its 43-year history of making award-winning healthcare software, Epic has prided itself on having a staff that is heavily focused on research and development and never focused on marketing. But times are changing, and Epic needs to maintain up,” the fake announcement reads.

Faulkner rarely does media appearances, and for essentially the most part, Epic has largely tried to maintain its head down through the years. 

In recent weeks, nonetheless, the corporate appears to have began to alter its posture. Epic began posting on the social media platform X, coincidentally, on April Fools’ Day. The corporate confirmed the authenticity of the account to CNBC. 

Seth Hain, senior vice chairman of research and development at Epic, participated in a podcast with Julie Yoo, general partner on the enterprise capital firm Andreessen Horowitz, that was released last week. Andreessen Horowitz is probably the most high-profile firms in Silicon Valley, but Epic has never accepted any investment from enterprise capitalists.

And on Monday, the podcast “Acquired,” which tells the stories of corporations and their founders, released a four-hour-long episode about Epic. The podcast is the No. 1 Technology show on Apple Podcasts and Spotify and reaches greater than 1 million listeners, in response to its website. It’s hard to know exactly how much Epic assisted with the research for the episode, however the hosts do mention that the corporate confirmed some facts. 

Taken together, these developments suggest that Epic is a minimum of exploring a more public-facing persona. To some extent, the corporate’s April Fools’ Day prank might actually ring true: “times are changing, and Epic needs to maintain up.”

Be happy to send any suggestions, suggestions, story ideas and data to Ashley at ashley.capoot@nbcuni.com.