WEBVTT - Medicare’s First Negotiated Price List Is Here 0:00:12.400 --> 0:00:15.680 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:15.680 --> 0:00:19.239 by the Litigation and policy team at Bloomberg Intelligence, the 0:00:19.320 --> 0:00:23.720 investment research platform of Bloomberg LP. We are the investment 0:00:23.760 --> 0:00:27.480 research platform on the Bloomberg terminal, with five hundred analysts 0:00:27.480 --> 0:00:31.080 and strategists working around the globe and focused on all 0:00:31.120 --> 0:00:35.639 major markets. Our coverage includes over two thousand equities and credits, 0:00:36.000 --> 0:00:38.879 and we have outlooks on more than ninety industries and 0:00:38.960 --> 0:00:44.040 one hundred market indices, currencies and commodities. This podcast series 0:00:44.080 --> 0:00:48.600 examines intersection of business policy and law. Today's podcast is 0:00:48.640 --> 0:00:52.520 a recording of a webinar on IRA Medicare price negotiations. 0:00:53.400 --> 0:00:55.760 My name is Ode Gersbacher and I am a senior 0:00:55.880 --> 0:00:59.360 litigation analyst covering litigation in the healthcare sector and now 0:00:59.440 --> 0:01:02.960 be your host today speaking with Dwayne Wright, bei's senior 0:01:03.000 --> 0:01:08.880 healthcare policy analyst. One of the products that we have 0:01:09.760 --> 0:01:13.840 due to this election cycle and our entire policy team 0:01:13.880 --> 0:01:18.480 in DC has been looking at different issues that will 0:01:19.560 --> 0:01:22.759 affect that will be affected by the outcome of this allegation. 0:01:23.240 --> 0:01:26.480 And so Dwayne, I'm going to let you provide just 0:01:26.480 --> 0:01:29.399 a quick explanation of what the matrix is before we 0:01:29.600 --> 0:01:30.360 actually dive in. 0:01:30.600 --> 0:01:35.880 Thanks OED and hello everybody. So the Election Matrix what 0:01:36.040 --> 0:01:40.560 is it. It's a tool for clients to track policies 0:01:40.600 --> 0:01:45.120 against different sectors across different sectors, along with the impact, 0:01:45.160 --> 0:01:50.040 timing and likelihood of passage under a Trump or a 0:01:50.200 --> 0:01:55.320 Harris presidency. The matrix has sixty three policies right now, 0:01:55.440 --> 0:02:00.640 it's growing across seven sectors, twenty eight industries, one hundred 0:02:00.720 --> 0:02:05.360 and forty companies. Again, that's likely to grow going forward 0:02:05.840 --> 0:02:08.520 and after the election will update it to reflect the 0:02:08.720 --> 0:02:13.760 incremental changes to policy, impact, probabilities and timing. So, as 0:02:13.800 --> 0:02:17.359 an example, if you want to know more about the 0:02:17.600 --> 0:02:21.480 IRA repeal outlook question that comes up a lot, especially 0:02:22.000 --> 0:02:25.680 as it relates to the healthcare pieces, you'll find our 0:02:25.800 --> 0:02:30.359 latest research notes there. And if you're looking for something 0:02:30.400 --> 0:02:34.360 that's pricing related, such as the three forty B program 0:02:34.560 --> 0:02:38.280 or marching rights, you'll also be able to find that 0:02:38.520 --> 0:02:41.000 there as well. All of this can be found at 0:02:41.040 --> 0:02:45.679 BI Laws at Laws and you just go to that page, 0:02:46.160 --> 0:02:48.920 look on the left hand rail and you'll see a 0:02:49.080 --> 0:02:52.600 tap for the Election Matrix, and you'll also be able 0:02:52.639 --> 0:02:58.080 to find our Litigation Matrix, which is also there and 0:02:58.120 --> 0:03:00.679 you'll be able to see the status of case is 0:03:00.720 --> 0:03:02.399 affecting a lot of the companies we cover. 0:03:02.680 --> 0:03:04.880 So that again that's BI Laws. 0:03:05.680 --> 0:03:10.880 Thanks Dwayne. Okay, so before we get started with what's 0:03:11.000 --> 0:03:14.079 just happened last week with the prices, I did want 0:03:14.120 --> 0:03:19.639 to give a quick update on the multiple litigation that 0:03:19.919 --> 0:03:26.359 the Inflation Reduction Acts many care pricing negotiation provision has 0:03:27.600 --> 0:03:32.480 how that's how that's developed. The sort of crux of 0:03:32.520 --> 0:03:36.600 it so far is that the farm school industry has 0:03:37.120 --> 0:03:40.160 not been able to win a single ish on a 0:03:40.200 --> 0:03:43.680 single issue. The government has prevailed wherever there has been 0:03:43.840 --> 0:03:50.200 a decision. So obviously that's not looking good for the industry. 0:03:50.440 --> 0:03:55.400 But as we know, everything gets appealed and is a 0:03:55.480 --> 0:03:58.840 possible issue that we might see in the Supreme Court. 0:04:01.720 --> 0:04:05.040 There are two cases that I want to point to. 0:04:05.280 --> 0:04:08.400 One is in the DC courts and that is a 0:04:08.480 --> 0:04:13.560 case brought by MERK almost a year ago. There was 0:04:13.600 --> 0:04:16.880 a summary judgment filed. There were some submissions after that 0:04:17.240 --> 0:04:19.640 that amended it, but we are still looking for a 0:04:19.760 --> 0:04:24.280 decision in that court, and that court is looking at 0:04:24.279 --> 0:04:29.720 the First Amendment and Fifth Amendment causes of action. We 0:04:29.839 --> 0:04:34.839 also had a decision in the New Jersey Court where 0:04:34.839 --> 0:04:38.640 there were actually four different cases that were joined together. 0:04:39.440 --> 0:04:42.599 One of those, which is the Novardes case, also looking 0:04:42.640 --> 0:04:46.000 at First Amendment, Fifth Amendment, but also Eighth Amendment. We 0:04:46.040 --> 0:04:49.880 are waiting for that decision. If either of those cases 0:04:50.800 --> 0:04:54.159 go differently from say the case in Ohio which was 0:04:54.240 --> 0:04:56.680 just decided but went for the government, or the case 0:04:56.720 --> 0:04:59.320 in Texas which was decided over a year ago. Now 0:05:00.000 --> 0:05:03.320 we may see a matchup at the Supreme Court eventually, 0:05:03.839 --> 0:05:06.279 but first we have to get through all of the appeals. 0:05:06.600 --> 0:05:10.279 So when we look at everything has been appealed and 0:05:10.839 --> 0:05:13.600 the last couple of cases that will likely get appealed 0:05:13.600 --> 0:05:17.599 regardless of the decision, we're looking at timing of at 0:05:17.680 --> 0:05:21.520 least twenty twenty six for possible Supreme Court decision, So, 0:05:21.960 --> 0:05:25.039 you know, don't we don't see any risk really in 0:05:25.080 --> 0:05:29.279 their short term as like there's a there's somewhat of 0:05:29.279 --> 0:05:32.920 a certainty in our view that these prices are going 0:05:32.960 --> 0:05:36.599 to go into effect, that things are going to go 0:05:36.680 --> 0:05:40.600 as planned for the government, and it will be at 0:05:40.720 --> 0:05:44.800 least a year before we get any inkling that this 0:05:44.920 --> 0:05:50.039 could change. Our view is that it's unlikely that these 0:05:50.120 --> 0:05:54.840 lawsuits would actually take the law down. There might be 0:05:54.880 --> 0:05:58.839 some changes, you know, at the edges, but we've we've 0:05:58.880 --> 0:06:01.839 thought for a while now that it's here to stay. 0:06:02.200 --> 0:06:05.760 So we're sort of monitoring these cases but also going 0:06:06.400 --> 0:06:12.920 with that assumption. Okay, so I will now move to 0:06:14.520 --> 0:06:18.480 the negotiats prices that we've just we've just that we're 0:06:18.520 --> 0:06:21.520 just revealed to us actually last week. But first, Dwayne, 0:06:22.040 --> 0:06:24.840 can you tell us what the factors are that medicare 0:06:25.600 --> 0:06:27.919 used to set these prices so we get a sense 0:06:27.920 --> 0:06:30.040 of how they came up with us. 0:06:30.320 --> 0:06:32.960 As a reminder, when we look at these prices, we 0:06:33.040 --> 0:06:36.880 have to also keep in mind that there was a 0:06:36.920 --> 0:06:40.360 ceiling price, and that's not the price that these manufacturers 0:06:40.400 --> 0:06:45.000 set themselves. It's what's included or in the law. And 0:06:45.040 --> 0:06:49.320 so the starting point is there's a ceiling price. 0:06:49.360 --> 0:06:50.520 So what is the ceiling price. 0:06:51.200 --> 0:06:56.360 It's the twenty twenty one non federal average manufacturing price 0:06:56.960 --> 0:07:00.760 in expine inflation to twenty twenty two. And then based 0:07:00.760 --> 0:07:03.640 on studies we've seen, it's about eighty percent of the 0:07:04.000 --> 0:07:08.200 whack wholesale acquisition cost or list price. And then off 0:07:08.240 --> 0:07:12.240 of that number, you then take a percentage based on 0:07:12.280 --> 0:07:15.160 how long the drug has been on the market. Now 0:07:15.240 --> 0:07:18.480 up to twenty thirty. There are two buckets. There's this 0:07:18.600 --> 0:07:21.960 short monopoly bucket and it's a drug that's been at 0:07:22.200 --> 0:07:26.120 approved or was approved between January one of twenty ten 0:07:26.800 --> 0:07:31.400 and September one of twenty sixteen. And then there's the 0:07:31.480 --> 0:07:35.680 long monopoly bucket where the drug was approved by the 0:07:35.760 --> 0:07:40.320 FDA on or before January one, twenty ten. That percentage 0:07:40.360 --> 0:07:46.360 discount off of the NONFAMP short monopoly drugs is seventy 0:07:46.360 --> 0:07:49.679 five percent, So it's a twenty five percent discount off 0:07:49.720 --> 0:07:53.520 of the NONVAMP. For long monopoly drugs, it's a sixty 0:07:53.560 --> 0:07:57.800 percent discount. Beginning in twenty thirty, there's going to be 0:07:57.840 --> 0:08:01.119 an extended monopoly Category four or drugs on the market 0:08:01.120 --> 0:08:05.080 between twelve and sixteen years, and those drugs will see 0:08:05.360 --> 0:08:11.000 thirty five percent discount off of the non VAMP. And 0:08:11.440 --> 0:08:16.000 so that's the NONFAMP that's not that's not the net price, 0:08:16.800 --> 0:08:20.080 And I should say the ceiling price is basically that 0:08:20.240 --> 0:08:23.760 formula or the lower of the net price. And we 0:08:23.800 --> 0:08:26.160 don't know what the net price is within party because 0:08:26.200 --> 0:08:30.280 that's confidential and there's no floor. So medicare can go 0:08:30.720 --> 0:08:34.880 as low as they want based on the negotiation. There's 0:08:34.920 --> 0:08:38.520 just a ceiling, so below that the agency then uses 0:08:38.559 --> 0:08:42.120 a number of factors to arrive at an MFP or 0:08:42.200 --> 0:08:46.120 maximum fare price. Two buckets to think about to guide 0:08:46.120 --> 0:08:50.800 the process. There's manufacture specific data and then evidence about 0:08:50.880 --> 0:08:56.360 alternative treatments. So within that manufacture specific data which is 0:08:56.400 --> 0:09:02.760 provided by manufacturers during theciation process, r and D costs 0:09:03.000 --> 0:09:06.120 or the manufacturer and to the extent that the r 0:09:06.120 --> 0:09:10.200 and D has been recouped, current unit costs of the 0:09:10.240 --> 0:09:13.400 production and distribution of the drug, whether there's been any 0:09:13.400 --> 0:09:19.880 financial support or the discovery of the drug, Any information 0:09:20.000 --> 0:09:24.240 on pending our proved patent applications, and then market data 0:09:24.320 --> 0:09:29.240 around revenue and sales volume for the drug. The public 0:09:29.320 --> 0:09:33.040 can also provide data as well which will also plan 0:09:33.160 --> 0:09:37.160 to this specifically for the second bucket, which is evidence 0:09:37.200 --> 0:09:42.080 about alternative treatments, and that includes the extent which the 0:09:42.280 --> 0:09:48.040 drug is a therapeutic advanced compared to other alternatives or 0:09:48.160 --> 0:09:54.760 therapeutic alternatives, prescribing information approved by the FDA for the drug, 0:09:54.840 --> 0:10:01.480 comparative effectiveness research of the drug compared to alter So 0:10:01.520 --> 0:10:06.080 there are a number of avenues in which CMS or 0:10:06.120 --> 0:10:11.200 Medicare is able to figure out or arrive at a 0:10:11.200 --> 0:10:14.000 at a price, especially or at these prices that we 0:10:14.040 --> 0:10:19.440 see on see or provided by Medicare, But how they're 0:10:19.480 --> 0:10:22.840 weighted we don't know. And I think it's fair to 0:10:22.880 --> 0:10:26.920 say that this administration may very well wait some of 0:10:26.960 --> 0:10:30.479 these factors differently than any future administration. 0:10:31.760 --> 0:10:34.360 So Dwin, do you think that we'll have more information 0:10:34.440 --> 0:10:37.880 at some point on how Medicare did weigh each factor 0:10:37.920 --> 0:10:40.640 for this so that we can have more productability for 0:10:40.679 --> 0:10:41.640 the future. 0:10:42.760 --> 0:10:47.520 By law, yes, So Medicare Agency has until March first, 0:10:47.520 --> 0:10:52.560 I believe, twenty twenty five to provide an explanation of 0:10:52.600 --> 0:10:56.800 the MSP for each drug. And this is where CMS 0:10:56.840 --> 0:10:59.920 will make public all the data provided by manufacturers and 0:11:00.080 --> 0:11:04.400 the public that are considered non proprietary. They will not 0:11:04.440 --> 0:11:08.960 be sharing any proprietary information, and it'll be an explanation 0:11:09.160 --> 0:11:12.920 based on many of the factors I mentioned earlier. Now 0:11:12.960 --> 0:11:18.800 it is possible CMS will announce the explanation earlier, especially 0:11:18.840 --> 0:11:21.320 when you think about and we'll go into this later. 0:11:21.920 --> 0:11:25.280 The next set of drugs that will be selected will 0:11:25.280 --> 0:11:29.760 be in February. I'll also note that CMS is not 0:11:29.920 --> 0:11:34.319 going to make public the R and D costs reported 0:11:34.360 --> 0:11:38.120 by the primary manufacturer, since again that's proprietary, so they 0:11:38.160 --> 0:11:42.240 may have some general statements about whether or not the 0:11:42.320 --> 0:11:44.480 manufacturers recouped it's our D costs. 0:11:45.480 --> 0:11:45.720 Now. 0:11:46.040 --> 0:11:48.480 I think one other question that comes up is, and 0:11:48.640 --> 0:11:51.079 this is something I've written about and I've used the 0:11:51.120 --> 0:11:56.040 word manageable, is this Are these cuts really manageable? I 0:11:56.040 --> 0:12:00.360 think ultimately the companies know better, but I think when 0:12:00.400 --> 0:12:02.760 you step back and take a look at these drugs 0:12:03.320 --> 0:12:07.439 that were first selected, the first ten they're on this list, 0:12:08.800 --> 0:12:14.479 it's probably at least initially manageable. One these are already 0:12:14.720 --> 0:12:19.520 highly rebated drugs or they're facing patent expiration or generic 0:12:19.520 --> 0:12:24.640 competition very soon. Now, over time, as more drugs from 0:12:24.760 --> 0:12:27.520 these companies are selected or probably have more of an 0:12:27.520 --> 0:12:31.280 impact on companies and will likely affect R and D 0:12:31.360 --> 0:12:35.320 strategies and life cycle management moving forward. And keep in mind, 0:12:36.200 --> 0:12:40.360 the law doesn't have or doesn't say anything about launch prices, 0:12:40.960 --> 0:12:44.920 so the expectation is and the Congressional Budget Office, which 0:12:44.960 --> 0:12:51.680 provides estimates for new policies, does believe that the law 0:12:51.720 --> 0:12:55.240 because there's no cap on launch prices and because of 0:12:54.160 --> 0:12:59.760 the limits on what these companies can do in terms 0:12:59.800 --> 0:13:02.720 of raising prices each year, and the fact that their 0:13:02.720 --> 0:13:06.720 monopoly pricing power has been limited, we may see more 0:13:07.200 --> 0:13:12.880 of these of more prices or more drugs launched at 0:13:12.960 --> 0:13:16.640 a higher price moving forward. So to your early question, 0:13:17.240 --> 0:13:20.040 when we know more March at the latest, but we 0:13:20.120 --> 0:13:21.360 could no sooner. 0:13:22.640 --> 0:13:27.440 Okay, So looking at this list, if I look at 0:13:27.640 --> 0:13:31.200 the list, still are jumps out because I know that 0:13:31.200 --> 0:13:34.800 there are some FDA approved biosimilars. So Jimney Insights to 0:13:34.920 --> 0:13:39.240 y was selected. And how long well the medicare prices, 0:13:39.360 --> 0:13:41.760 I mean, how long will take for those to be implemented? 0:13:42.520 --> 0:13:45.160 Yeah, So this is a good case study question and 0:13:45.760 --> 0:13:49.640 a good way to kind of understand how the IRA works. Now, 0:13:49.760 --> 0:13:53.480 keep in mind, to be selected, it has to be 0:13:53.520 --> 0:13:56.000 a combination of a number of things. One, does the 0:13:56.120 --> 0:14:00.719 jarger biologic cabbage generica buy similar on the market. If 0:14:00.720 --> 0:14:04.120 it does, then it does not qualify or it cannot 0:14:04.120 --> 0:14:08.199 be selected. Is the gross spending for that drug does 0:14:08.200 --> 0:14:10.839 it make it one of the in this case, the 0:14:11.280 --> 0:14:16.320 top ten party drugs that are eligible. And then two 0:14:16.440 --> 0:14:21.520 or three has the product been on the market for 0:14:21.800 --> 0:14:25.160 seven or eleven years? Seven for a small molecule, or 0:14:25.760 --> 0:14:29.600 eleven for a large molecule. Now, when you get past 0:14:29.680 --> 0:14:34.240 all of that, timing is a key issue. So to 0:14:34.280 --> 0:14:41.720 your point, yes, there are three FD approved biosimilars to Stellara, 0:14:42.520 --> 0:14:45.280 but the key here is they weren't marketed in time 0:14:45.360 --> 0:14:48.720 to prevent the drug from still from getting selected, which 0:14:48.800 --> 0:14:55.600 was August twenty twenty three, and then the biosimilars were 0:14:55.640 --> 0:14:59.600 not marketed before the end of the negotiation period, which 0:14:59.640 --> 0:15:05.040 was first just a couple of weeks ago. The three 0:15:05.160 --> 0:15:09.040 biosimilars will be marketed at some point later this year 0:15:09.320 --> 0:15:14.440 or early twenty twenty five, and so that kind of 0:15:14.440 --> 0:15:17.440 gives you a sense of okay. Even if a drug 0:15:17.520 --> 0:15:22.360 is going to face generic competition, doesn't necessarily mean it's 0:15:22.400 --> 0:15:27.800 going to be exempt from getting selected, but it could 0:15:27.840 --> 0:15:34.400 prevent a MFP from going into effect. Now, another thing 0:15:34.440 --> 0:15:39.160 to keep in mind, if a biosimilar generic does come 0:15:39.200 --> 0:15:43.400 to market during the negotiation period, the MFP does not 0:15:43.480 --> 0:15:48.360 go into effect and the new drug won't or won't 0:15:48.400 --> 0:15:52.000 be replaced by a different drug. If the generica buy 0:15:52.000 --> 0:15:55.920 similar enters the market during the first three months of 0:15:55.960 --> 0:15:59.720 the price applicability, which in this case for this list 0:16:00.360 --> 0:16:04.160 is March thirty first, twenty twenty six, then the Medicare 0:16:04.200 --> 0:16:06.359 price remains in effect. 0:16:06.000 --> 0:16:06.800 For that year. 0:16:07.680 --> 0:16:12.480 If the competition comes in after April first, twenty twenty six. 0:16:12.640 --> 0:16:16.840 In this example, the price remains through twenty twenty six 0:16:17.040 --> 0:16:23.160 and through twenty twenty seven. CMS will have to determine 0:16:23.240 --> 0:16:29.320 whether there's legitimate biosimilar or generic marketing, and it's not 0:16:29.480 --> 0:16:33.600 just a token market on the presence on the market 0:16:34.000 --> 0:16:36.840 to get that brand product pulled from the program. So 0:16:37.120 --> 0:16:41.640 in guidance, people may remember that CMS came up with 0:16:41.680 --> 0:16:46.400 this term called bonafide marketing or bonified generic marketing. 0:16:47.160 --> 0:16:48.200 That's not in the law. 0:16:48.680 --> 0:16:52.000 It is just one way that CMS is interpreting the 0:16:52.080 --> 0:16:56.880 law and a mechanism it's using to ensure that you know, 0:16:57.640 --> 0:17:01.920 there aren't any games being played in terms of enabling 0:17:01.960 --> 0:17:04.919 these brand products from getting not getting selected, or getting 0:17:04.920 --> 0:17:06.280 off the list sooner than they should. 0:17:07.520 --> 0:17:11.679 Okay, so you can't have a biosimilar and not market 0:17:11.720 --> 0:17:14.280 it and still be off the off the list. 0:17:16.040 --> 0:17:20.000 Right the way it's been interpreted by CMS, I think 0:17:20.640 --> 0:17:23.200 it may be written one way, and I think that 0:17:23.200 --> 0:17:27.520 that's where some criticism comes in, but at least based 0:17:27.560 --> 0:17:31.520 on current interpretation by CMS, which could change because they're 0:17:31.560 --> 0:17:36.400 going to issue guidance EAT for each applicable year. There 0:17:37.320 --> 0:17:43.280 they're going to be looking at whether there's a sufficient marketing, 0:17:43.760 --> 0:17:47.280 there's been sufficient marketing of a drug, and there's they've 0:17:47.320 --> 0:17:51.320 also thrown in a totality of the circumstances to get 0:17:51.359 --> 0:17:54.680 to that point. And my view is that can mean 0:17:54.800 --> 0:17:55.680 just about anything. 0:17:57.080 --> 0:18:01.960 Okay, So if we just think about the Stellara example 0:18:03.119 --> 0:18:08.040 for future biologics that may have biosimilars high on their tail, 0:18:08.200 --> 0:18:14.560 can can you maybe think about what from companies could 0:18:14.560 --> 0:18:21.200 do differently? Obviously when Selara was first sold, this wasn't 0:18:21.400 --> 0:18:27.239 even a thought, but go going forward, any company that 0:18:27.520 --> 0:18:30.440 has a biologic, is there anything that that company could 0:18:30.560 --> 0:18:34.159 do so that they prevent these price cuts? 0:18:35.000 --> 0:18:38.480 Yeah, So again Selara is a great example to help 0:18:38.520 --> 0:18:42.160 explain the law. So there is a biosimilar delay exemption, 0:18:43.119 --> 0:18:47.399 and it's a provision that lets the maker of the 0:18:47.440 --> 0:18:51.280 potential negotiated drug to get a pass for one year. 0:18:51.400 --> 0:18:55.640 They can get an additional year if there's a high 0:18:55.760 --> 0:18:59.080 likelihood that a biosimilar and will enter the market in time. 0:19:00.200 --> 0:19:05.560 But in the case of Stillara, that loophole didn't apply 0:19:06.280 --> 0:19:10.280 because it is only available for drugs that have been 0:19:10.320 --> 0:19:14.639 on the market or between twelve and sixteen years, in 0:19:14.680 --> 0:19:19.720 other words, extended monopoly drugs. Stillara was approved in two 0:19:19.800 --> 0:19:24.440 thousand and nine and therefore didn't qualify that. The cutoff 0:19:24.720 --> 0:19:33.640 for this round was January January one, twenty ten, and 0:19:33.680 --> 0:19:37.159 again Stillara was proved two thousand and nine. If it 0:19:37.240 --> 0:19:43.320 had and the biologic manufacturer would have had to apply 0:19:43.440 --> 0:19:47.040 for this not be biosimilar, Medicare would have to be 0:19:47.119 --> 0:19:54.040 convinced that biosimilar competition is looking fairly reasonable, and you know, 0:19:54.160 --> 0:20:00.199 look at patent challenges, exclusivity issues and all those things 0:20:00.240 --> 0:20:05.760 of making a determination of whether the biosimilar delay is warranted. 0:20:05.840 --> 0:20:10.040 So when we look ahead for the next round of 0:20:10.200 --> 0:20:17.240 drugs that will be selected, the biosimilar delay will be 0:20:17.280 --> 0:20:24.320 available for drugs that were marketed before January one, twenty eleven. 0:20:24.480 --> 0:20:27.320 And you know, we'll go into this later, but that 0:20:27.440 --> 0:20:30.480 might not be a whole lot of examples, given that 0:20:30.560 --> 0:20:34.680 we'll probably looking at small molecule drugs, but it could 0:20:34.920 --> 0:20:38.160 mean a big deal for companies in twenty twenty eight 0:20:39.000 --> 0:20:41.359 when Part B drugs start coming outto the market. 0:20:43.320 --> 0:20:47.399 Okay, and so are these prices just set for the 0:20:47.400 --> 0:20:51.040 foreseeable future until the drug comes off the list, or 0:20:51.200 --> 0:20:54.600 is there a certain process where they can get renegotiated 0:20:54.720 --> 0:20:55.840 or change over time. 0:20:56.760 --> 0:21:00.040 Yeah, so two things. One for each year after the 0:21:00.119 --> 0:21:04.520 first initial price applicability year in this example twenty twenty six. 0:21:05.400 --> 0:21:08.440 Beginning twenty twenty seven, CMS will publish an updated and 0:21:08.520 --> 0:21:13.120 negotiated price and that is basically the price updated by 0:21:13.640 --> 0:21:19.040 CPI CPIU to be precise, So there's an inflation index 0:21:19.160 --> 0:21:22.679 that's not tied to healthcare, it's just overall CPI. The 0:21:22.760 --> 0:21:27.520 other piece is the there is a renegotiation process. And 0:21:28.040 --> 0:21:30.399 now there isn't a whole lot of detail in the 0:21:30.400 --> 0:21:36.200 IRA text about the negotiation process, but the Medicare Agency 0:21:36.320 --> 0:21:39.040 is tasked with coming up with this process, which will 0:21:39.080 --> 0:21:43.440 start in twenty twenty eight. Renegotiation is available where drug 0:21:43.520 --> 0:21:49.720 has a a selected drug as a new indication or 0:21:49.800 --> 0:21:54.720 a change of status to an extended monopoly drug or 0:21:55.240 --> 0:21:58.359 from extended moopoly to a long monopoly drug based on 0:21:58.400 --> 0:22:01.800 how long it's been to market on the market. And 0:22:01.840 --> 0:22:06.080 then there's this broad category that is up to CMS 0:22:06.080 --> 0:22:10.520 discretion where there's been some material change to the product 0:22:11.160 --> 0:22:16.560 based on unit costs of production, market sales, market data 0:22:16.600 --> 0:22:22.040 and sales volume, or new comparative effectiveness research relating to 0:22:22.640 --> 0:22:28.640 therapeutic alternatives for example. Again that's up to HHS. CMS 0:22:28.680 --> 0:22:32.800 has not provided information on the negotiation process. They didn't 0:22:32.880 --> 0:22:37.720 during last years initial guidance because that applies to twenty 0:22:37.720 --> 0:22:42.840 twenty six. They did not provide any additional information this 0:22:42.960 --> 0:22:46.440 year for the draft guidance because that's for twenty twenty seven. 0:22:47.200 --> 0:22:51.080 They have signal they'll provide more detail in the next 0:22:51.080 --> 0:22:54.159 guidance for twenty twenty So we're looking forward to seeing 0:22:54.760 --> 0:22:59.280 what that might be. For drugs in twenty twenty eight. 0:23:00.080 --> 0:23:04.000 What are those drugs that might be affected. And this 0:23:04.119 --> 0:23:06.639 is a broad brush and we need to keep in 0:23:06.680 --> 0:23:11.040 mind generic entry could play a role. A lot of 0:23:11.080 --> 0:23:15.280 these drugs are seeing patent expirations, so that's also something 0:23:15.320 --> 0:23:18.280 to keep in mind. But I'm looking at six Zerelto 0:23:19.240 --> 0:23:22.240 by Jane Jay in twenty twenty eight. In terms of 0:23:22.320 --> 0:23:27.960 renegotiation Eloquist Brstill Meyers twenty twenty nine and Bruvka Mabb 0:23:28.119 --> 0:23:33.960 twenty thirty. Barcica by Astrazenica in twenty thirty one. Jardians 0:23:34.000 --> 0:23:36.920 by Lilian twenty thirty one and Intrusto by Novars in 0:23:36.960 --> 0:23:40.359 twenty thirty two. Again going back to an earlier comment, 0:23:40.640 --> 0:23:45.520 some of these drugs have patent expirations, for example Zerelto 0:23:45.600 --> 0:23:48.760 in twenty twenty five and trust To and Farciga. And 0:23:48.880 --> 0:23:52.560 I know that there's ongoing litigation challenges where we could 0:23:52.640 --> 0:23:58.199 see Generica buy similar competition. So the renegotiation process might 0:23:58.240 --> 0:24:02.000 not matter for them, but it might matter for others 0:24:02.440 --> 0:24:07.200 where they don't anticipate any kind of competition until much 0:24:07.400 --> 0:24:10.600 much later. So these prices are not static. 0:24:10.960 --> 0:24:16.600 They can change, okay, And so do all Medicare beneficiaries 0:24:16.640 --> 0:24:18.800 have access to these drugs at these prices? 0:24:20.320 --> 0:24:26.320 Well, yes, by law, drum makers with a manufacturing manufacturer, 0:24:26.400 --> 0:24:31.560 I'm sorry, maximum fair price are required to make prices 0:24:31.600 --> 0:24:37.200 available to Medicare beneficiaries and mail order services part plans 0:24:37.240 --> 0:24:42.560 and Medicare Advantage part plans must include drugs on their formulary, 0:24:42.760 --> 0:24:47.080 but CMS guidance doesn't require favorable placement. In other words, 0:24:47.480 --> 0:24:50.960 there's no guarantee that these drugs will we place on 0:24:51.760 --> 0:24:56.760 the formula in preferred position versus a non preferred position, 0:24:57.040 --> 0:25:01.879 or won't have other requirements UH placed on them that 0:25:01.960 --> 0:25:05.600 might limit patient access. So, based on some of the 0:25:05.680 --> 0:25:09.240 research we've seen about some of the formula lary lists 0:25:09.280 --> 0:25:14.919 and where these drugs are covered, how they're covered, nearly 0:25:15.000 --> 0:25:19.359 all beneficiaries have coverage for a majority of the drugs, 0:25:19.359 --> 0:25:24.199 looking at Intrusto and Bruvca, Aloquist, Tridience, Zerelto and Mbrel. 0:25:24.600 --> 0:25:29.639 Maybe less coverage for some others Genuvia, Parsica, Stellara, and NovoLog. 0:25:30.440 --> 0:25:34.280 Most are on the preferred tier or the specialty tier 0:25:36.840 --> 0:25:40.440 that latter parts in Edinbrel and Brufica and Stellara, and 0:25:40.520 --> 0:25:45.560 so from a better fishery standpoint, the MFP could very 0:25:45.560 --> 0:25:50.840 well mean lower co insurance for the beneficiary because typically 0:25:50.920 --> 0:25:54.879 consurance is tied to the list price, not the net price. 0:25:55.000 --> 0:25:59.760 Now to my earlier point about a CMS or the 0:25:59.840 --> 0:26:03.080 law requires these drugs to be on formulais, but CMS 0:26:03.080 --> 0:26:07.080 does not require them to be in a particular position 0:26:07.280 --> 0:26:10.920 or does not determine or state or require any certain 0:26:11.040 --> 0:26:13.360 level of access. It does remain to be seen how 0:26:13.400 --> 0:26:16.160 part deep plans will manage the tiering for these drugs 0:26:16.200 --> 0:26:20.720 now that rebates are no longer available. For example, we 0:26:20.840 --> 0:26:25.120 just looked at two drugs Genuvia, where there are some 0:26:25.480 --> 0:26:30.000 direct substitutes, which could include the Ringer Engelheim's Tragenta and 0:26:30.280 --> 0:26:36.160 Tacato's Asina. Both alternatives have a higher net price based 0:26:36.200 --> 0:26:41.040 on our estimates which we looked at Medicare Payment Advisory 0:26:41.080 --> 0:26:45.880 Commission data on potential rebates, so those might be more 0:26:45.920 --> 0:26:51.280 appealing than the MFP drug Genuvia in this case since 0:26:51.359 --> 0:26:58.800 it rebates won't be available. Another example Aloquist and Zerelto, 0:26:59.200 --> 0:27:01.879 which is an interesting example because you have two drugs 0:27:01.880 --> 0:27:07.800 in the same class there that have an MFP and 0:27:07.840 --> 0:27:11.600 some other drugs that don't. And just as a reminder, 0:27:12.800 --> 0:27:18.000 within Part D there is a requirement that two drugs 0:27:18.040 --> 0:27:23.639 from each class must be covered, and so you know 0:27:23.720 --> 0:27:27.480 what happens where you have eloquisenceerelto with a maximum fair 0:27:27.560 --> 0:27:32.080 price versus those without but they have rebates. That'll be 0:27:32.119 --> 0:27:35.520 interesting to see and we'll know more next year as 0:27:36.280 --> 0:27:40.320 these plant formularies come out, but it will also be 0:27:40.440 --> 0:27:43.440 interesting to see if there's a step up in utilization 0:27:43.600 --> 0:27:50.719 management restrictions like except therapy, quantity, quantity limit and prior off. Again, 0:27:50.840 --> 0:27:56.119 Medicare has signaled that it will review formulaies to ensure 0:27:56.160 --> 0:28:00.359 that they aren't discouraging beneficiaries from enrolling in certain place lands, 0:28:01.080 --> 0:28:05.040 and the doors open for new requirements to ensure that 0:28:05.080 --> 0:28:08.679 beneficiaries have access. So it's too early to say, but 0:28:09.200 --> 0:28:11.680 these are some things to keep in mind in terms 0:28:11.760 --> 0:28:14.600 of yes, we know what the price is, and we 0:28:14.640 --> 0:28:19.280 have an assumption about what the take up rate has been, 0:28:19.560 --> 0:28:25.119 utilization has been for beneficiaries, but with all these moving parts, 0:28:25.119 --> 0:28:27.200 we can't just assume it's going to be the same 0:28:27.680 --> 0:28:31.199 given some of the incentives and maybe disincentives for putting 0:28:31.200 --> 0:28:34.680 these drugs in a preferred position on the formulas. 0:28:36.080 --> 0:28:40.040 Okay, so then looking ahead, you know what drugs are 0:28:40.080 --> 0:28:43.160 you watching that you think might provide some clues for 0:28:43.400 --> 0:28:45.120 future negotiations. 0:28:46.560 --> 0:28:49.160 Yeah, so the one drug I was looking at in 0:28:49.400 --> 0:28:54.280 particular when the prices came out was in Bruvaca, which 0:28:54.320 --> 0:28:59.800 is Jensen And have these cancer drug I mentioned earlier 0:29:00.000 --> 0:29:04.520