CMS Drops the First Ten Meds to Be Price Controlled, Including Some Surprises

Only one thing to talk about today …

CMS released its list of 10 medicines that will be subject to the first round of price controls. I know that you’ve all seen this list already, but for reference (asterisks mark companies that have filed lawsuits):

• Eliquis (BMS/Pfizer)*

• Jardiance (BI)*

• Xarelto (JNJ)*

• Januvia (Merck)*

• Farxiga (AZ)*

• Entresto (Novartis)

• Enbrel (Amgen)

• Imbruvica (AbbVie)

• Stelara (JNJ)*

• NovoLog family (Novo)

There is -- and will be -- a lot to unpack here as coverage rolls in, but let me give you my first dozen impressions, in no particular order:

1. There will probably be chatter about “surprises.” Pretty much everyone saw Eliquis, Xarelto, Januvia, Jardiance, Imbruvica and Enbrel coming. The other four were not consensus picks. Here is former FDA chief Scott Gottlieb on his surprises.

2. CMS seems to have decided not to take any big risks around drugs facing generic competition, so a handful of possible-if-not-expected medicines on the verge of loss-of-exclusivity didn’t make the list (e.g. GSK’s Breo). Interesting in light of the AstraZeneca lawsuit, which calls out CMS’ jury-rigged standards for assessing generic competition.

3. As a reminder, the numbers being thrown around -- “more than $50 billion in spending,” etc. -- are based on the gross spending, not spending after rebates. Read this classic from Matt Herper if that’s a new concept.

4. There are five heart drugs here and only one cancer med. I don’t think I saw a single list that had both Entresto and Farxiga on it. Given the way the list was compiled -- gross sales -- it suggests that heart meds are getting a ton of use in Medicare.

5. Every single medicine on the list is subject to pretty intense price competition right now -- and, with maybe one exception, pretty huge rebates -- raising the question of exactly how big net-price cuts can be.

6. Riffing off of that: if HHS ends up with prices just a tick lower than existing net prices, would the average American be amazed and impressed? I would tend to think that the answer is “yes.” I mean, announcing that the government has cut the price of insulin by 90% or chopped the price of diabetes meds in half sounds meaningful, even though it’s not.

7. Harvard’s Ben Rome flags a worthwhile question in the Endpoints coverage: will the inclusion of within-class competitors (Eliquis/Xarelto, Jardiance/Farxiga) provide the government additional leverage?

8. BMS’ Catherine Owen makes a critical point about access in STAT’s story this morning, pointing out that CMS has put almost no formal guardrails on PBM behavior, meaning that even price-controlled meds could still have lousy formulary placement or aggressive utilization management.

9. What happens with the lawsuits? Do Novartis, Novo and Amgen file? Does the Astellas lawsuit -- which was not moving at all, anyway, get dropped without Xtandi on the list?

10. CMS said that it granted four companies small-biotech exemptions, which presumably kept Incyte’s Jakafi off the list.

11. CMS is giving a little more detail on the public listening sessions. They’re slated for Oct. 30 to Nov. 15, and signups should be available by Friday.

12. The markets just opened. Wall Street yawned. As in, the companies with “surprise” inclusion actually traded up a tick. The companies where inclusion was expected rose a couple of ticks. Read into that what you will.