IRA Reactions from JNJ and Novartis Earnings Calls Underscore Long-Term IRA Impacts

“In terms of IRA and kind of what's been going on, if we take a look at Part D redesign, while we're not externally quantifying the impact at this time, what we can say is that we do anticipate a net unfavorable impact in 2025. … These numbers are actually already included in that guidance that we provided. 

Same thing as it pertains to the government pricing process, we are still in that. We have received the final numbers from the government, we're not disclosing that at this time. That will be disclosed in the September time frame. And while we are not in alignment with IRA and the price setting process, those numbers have been included in the guidance that we provided last year at EBR, that still looks very good to us today.

So first, we'd say it's not a negotiation, it's government price setting. It's not a situation where companies have the opportunity to, in effect walk away from the prices that are set by government. 

I'd also say, while in the short term, this might be manageable on our first set of drugs, in the long run, this policy is really not good for innovation, good for patients in the United States. And companies are managing, it's managing by shifting away from small-molecule medicines for other therapies and neurological diseases maybe that can only be treated by small molecules. 

So I think it's very important to say, the policy is not a good one. It's bad for American patients, bad for innovation and sincerely hope that it gets corrected. Now in terms of our midterm guidance, we factored in and our mid single digit guidance into the 2030s. We factored in IRA. And so we manage it through a combination of the kinds of medicines we develop, the indication creation go after, etcetera. And that's how we're approaching it. Can't comment on the current price settings approach that CMS is taking right now. Those prices will obviously come out in for Entresto in September.

But I think right now, our focus is very much still to shift the policy. There are a few bills in play. There is a bill that is currently being discussed to … correct genetically targeted therapies, bipartisan support has passed through multiple committees. So we continue to be hopeful that ASOs, siRNAs, and related technologies will move from 9 to 13. 

Another bill that is being discussed is within the rare disease framework to move off of a single rare disease to multiple rare disease drugs to have the same benefits if you're in a single rare disease. So if you take a case study like Scemblix, our ability to develop Scemblix beyond CML and another rare cancer is limited because of the IRA's policy. And maybe it would make sense to actually develop it in another cancer type, but difficult to do given the IRA policy. So I think that's a second bill out there. 

And then third, there's the full correction of 9 to 13. So I think when I'm on the Hill, I have good conversations. I think there's a broad recognition that there needs to be something done because this is an unintended consequence of poorly drafted legislation.

But how that actually transpires given that we're in a political cycle, I think we'll have to see in 2025 and beyond.