Bristol Myers Squibb and Johnson & Johnson have expressed confidence in their ability to manage the impact of the Inflation Reduction Act’s drug pricing negotiations on their blockbuster drugs, Eliquis, Stelara, and Xarelto.
Why it matters: The companies’ optimism suggests that the initial pricing set by the Centers for Medicare and Medicaid Services (CMS) may be more reasonable than initially feared, providing a level of certainty for investors in healthcare stocks.
The details:
- Bristol Myers Squibb CEO Christopher Boerner stated, “Now that we have seen the final price, we’re increasingly confident in our ability to navigate the impact of IRA on Eliquis.”
- Johnson & Johnson’s executive vice president, Jennifer Taubert, said that the company will not need to change its guidance once the prices are revealed, as the numbers have already been included in their projections.
- Both companies have sued the government over the IRA powers, calling them unconstitutional, but the lawsuits have been dismissed in court.
- Eliquis, Stelara, and Xarelto collectively brought in billions of dollars in revenue for their respective companies in 2023.
Jared Holz, a healthcare equity strategist at Mizuho, suggests that Medicare’s transparent and predictable drug pricing model could lead to more consistent performance and potentially higher valuations for companies within the sector.
The big picture: The structured approach to drug pricing may offer a reassuring factor for investors navigating the complexities of healthcare stocks, potentially reducing volatility and making the sector an attractive option for long-term investors.
What they’re saying:
- “We interpret these cumulatively as suggesting a more reasonable price cut than feared associated with IRA,” said JPM analyst Chris Schott.
- “Having a clear and structured drug pricing model reduces a significant amount of uncertainty in the healthcare market,” noted Jared Holz.
- Bristol Myers Squibb CEO Chris Boerner stated, “We continue to believe that arbitrary price-setting by the government on life-saving medicines is not good public policy.”
What’s next: The official announcement of the government-negotiated prices for the selected blockbuster drugs is expected in the coming weeks, with the new prices set to take effect in 2026.
Full story
Bristol Myers Squibb CEO Christopher Boerner expressed confidence in the company’s ability to handle the impact of the Inflation Reduction Act’s drug pricing measures on its blockbuster blood thinner, Eliquis. During a recent earnings call, Boerner stated, “Now that we have seen the final price, we’re increasingly confident in our ability to navigate the impact of IRA on Eliquis.”
The company has been in negotiations with the Centers for Medicare and Medicaid Services (CMS) regarding the new government-negotiated prices for select drugs, which are set to take effect in 2026. While CMS planned to reveal the new prices by September 1, Boerner indicated that negotiations are nearing completion, with an official announcement expected in the coming weeks.
Despite the optimism surrounding Eliquis, Boerner emphasized that BMS remains concerned about the long-term implications of the IRA on innovation in the pharmaceutical industry. He stated, “We continue to believe that arbitrary price-setting by the government on life-saving medicines is not good public policy.”
BMS reported strong financial results for the second quarter, with revenue increasing by 9% year over year to $12.2 billion, surpassing analyst expectations.
Bristol Myers Squibb’s Q2 performance
The company’s portfolio of new products played a significant role in this growth, with notable increases in sales for drugs such as Reblozyl, Breyanzi, Opdualag, and Camzyos. Eliquis remained BMS’ top-selling drug, generating $3.4 billion in sales, a 7% increase compared to the previous year. Cancer drug Opdivo also saw a 16% rise in sales, reaching $2.4 billion, while Revlimid, which has already lost exclusivity, experienced a modest 7% decline to $1.35 billion.
Analysts have highlighted the overall strong performance of BMS’ growth portfolio, which saw an 18% increase in sales to $5.6 billion. The company’s solid financial performance and diverse product portfolio suggest that it is well-positioned to handle the challenges posed by the IRA’s drug pricing measures. As the pharmaceutical industry navigates the regulatory and pricing landscape, BMS remains focused on delivering innovative treatments to patients while adapting to the evolving healthcare environment.
- Yahoo.”Why Wall Street is unfazed by Medicare drug pricing threat”.
- CNBC.”Medicare’s drug pricing can give investors certainty on healthcare stocks, says Mizuho’s Jared Holz”.
- FiercePharma.”Bristol Myers CEO ‘increasingly confident’ company can handle IRA pricing on Eliquis”.