I'm Worried There Will Be Widespread Inability to Untangle Near-Term and Long-Term IRA Effects

This is an important story from The Hill. Not because it’s insightful or even particularly good, but because I think it reflects a dangerous kind of conventional wisdom that is going to require some nuanced pushback. 

In a nutshell, the article looks at a couple of instances lately where pharma execs have suggested that the near-term impact of the IRA will be mild, and the story blows that conclusion out a bit, suggesting that maybe the law, as a whole, will not amount to the assault on innovation that industry has warned about. 

But it’s possible -- actually, it’s likely -- that two initially contradictory conclusions will both be true. 

First, the initial set of price controls may not be that bad. I mean, some of the medicines getting a government-set price are already incredibly cheap on a net-price basis. Merck has said Januvia sells at a 90% discount. Novo’s insulins saw a nearly 25% net price cut in 2023. There is very little room for the government to whomp drugs like that much harder than they’re being whomped by the PBMs right now. 

But -- second -- the initial 10 medicines are just an amuse-bouche. The main course is going to come in a couple of years, when the law targets more medicines that are not already highly rebated. That process is probably going to leave a mark, both on company revenues and how they go about drug development. 

So the dialogue over the next year or so is going to be profoundly misleading (especially if it’s framed the way The Hill framed it). Just because some of the initial companies targeted survive the first round of price controls is unlikely to be predictive of the overall severity of the law. 

I suspect this is something that I’ll have to write over and over again. I apologize in advance for the repetition.

• I feel like there is less to this CBO report on coverage of obesity meds by Medicare than meets the eye. Yeah, other indications will be covered. Maybe there will be legislation clearing the way. Semaglutide will almost certainly be in the next round of price controls. None of that is a surprise. The big unknown is what CBO thinks this will all cost, and there’s still not a number on that. Regardless of my feelings, STAT and Biospace still covered. 

• Not sure what to make of this very deep dive from STAT on states trying to carve out orphan drugs from their prescription drug affordability boards. In some ways, it’s a pretty comprehensive look at the discussion. But I worry that some of the major critiques of the whole PDAB thing -- namely the lack of impact on patient OOPs -- are missing. 

• So GSK is also going to cap OOP prices for its inhalers at $35. The changes will take place later than the programs that AZ and BI will put in place: GSK’s policies could hit as late as January 2025. Still curious about the specifics. Still assuming this will be the insulin playbook. At least Bernie is happy. 

• Fascinating piece from the NYT on how the settlements between states and Centene really went down, suggesting that the capitulation of the insurance giant around overcharges was engineered by a bunch of clever lawyers, as opposed to an organic groundswell of state-level lawsuits. 

• I’ve said it before, and I’ll say it again: Mark Cuban is the greatest threat to PBMs out there, because not only does his fame give him a huge platform, he’s able to communicate incredibly clearly on a complex topic. Adam Fein published a version of Cuban’s remarks at the White House, and they’re well worth the read.