J&J’s Stelara Targeted for Price Cuts as Low-Cost Version Nears

Amid the names of 10 blockbuster drugs subject to first-time US price negotiations, one surprise stood out: Johnson & Johnson’s Stelara, a treatment for autoimmune disorders.

Drugs that face competition from lower-cost equivalents are supposed to be exempt from the negotiations with the US Medicare program. But Stelara’s last US patent expires this September, and a biosimilar version from Alvotech SA and Teva Pharmaceutical Industries is expected by 2025. That means a low-cost competitor to Stelara may already be available by the time negotiated prices take effect in 2026.

The dynamic shows how the pricing measures in President Joe Biden’s signature Inflation Reduction Act may be less dramatic than either the pharma lobby or the administration make them out to be. Only older drugs are selected for negotiation, and most are nearing the point where profits would be eroded by expiring patents and lower-cost versions. Merck & Co.’s Januvia, for diabetes, landed on the list even though it’s also expected to face cheap competition in 2026.

The policy’s “price control provisions will constrain medical innovation, limit patient access and choice, and negatively impact overall quality of care,” J&J said in a statement. Merck warned it would stifle research and bring “potentially devastating consequences” for patients seeking cures. Both companies have challenged the policy in court.

WATCH: The Biden administration says 10 prescription drugs will be subject to price negotiations with Medicare. John Tozzi reports.

Source: Bloomberg

Wall Street analysts and investors were less concerned. Most of the drugs on the list are minor contributors to companies’ revenue and earnings, analysts from JPMorgan Securities wrote in a research note. J&J’s blood thinner Xarelto and Imbruvica, on which it’s partnered with AbbVie Inc., were also on the Medicare negotiation list, and J&J shares fell 0.7% as of 12:25 p.m. in New York.

Government officials followed the law’s protocols to select drugs for price talks, Centers for Medicare and Medicaid Administrator Chiquita Brooks-LaSure said, and will take note if lower-cost equivalents reach the market before 2026.

“If we see generics emerge and companies start to face more competition, we’ll certainly take that into account,” she said Tuesday in an interview. “But today we’re really focused on what we’re seeing today, which is that these are the 10 drugs that are not facing competition.”

--With assistance from Jeannie Baumann and Madison Muller.

To contact the reporter on this story:
John Tozzi in New York at jtozzi2@bloomberg.net

To contact the editors responsible for this story:
Cynthia Koons at ckoons@bloomberg.net

John Lauerman, Tonya Garcia

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