CMS proposal would leave HIV therapies as well as antidepressants and cancer treatments unprotected

Trump Medicare Plan Targets Drugs From AstraZeneca to Roche

The latest proposal from the U.S. Centers for Medicare and Medicaid Services (CMS) to let insurers use step therapies, or to drop protections on certain classes of drugs if price increases outpace inflation, may harm a wider circle of drugmakers, ranging from GlaxoSmithKline to Gilead.

Amgen, Regeneron Pharmaceuticals and Roche Holding are often cited as the drugmakers having the most to lose in proposed changes to Medicare. Regeneron’s Eylea, Roche’s Avastin and Amgen’s franchise of blood boosters get a good part of their revenue from sales under Medicare. Yesterday’s

CMS proposal would leave HIV therapies as well as antidepressants and cancer treatments unprotected.

Gilead and Glaxo, as the top HIV manufacturers, as well as makers of anti-depressants and antipsychotics like AstraZeneca, Pfizer, Allergan, Bausch Health, Lilly and Otsuka Holdings may face new challenges and may be deterred from price hikes, Height analyst Andrea Harris wrote in a note to clients. Harris predicts “a fairly modest impact on drug manufacturers and Medicare plan sponsors” overall and says the final rule, expected by April, will likely differ from the proposal.

Veda analyst Spencer Perlman agrees. “Whether this policy will be finalized is an open question; it remains to be seen if CMS can withstand withering political pressure likely to come from patient advocacy groups concerned with the potential loss of access to certain medications.”

The proposals may be a boon for insurers though, and also favor pharmacy benefit managers. UnitedHealth, for example, is already using step-therapy, where patients try cheaper drugs first before turning to more expensive treatments, in some of its Medicare Advantage plans, Perlman noted.

New rules could benefit UnitedHealth, Humana and WellCare the most, while Aetna, Anthem and Cigna may be less affected, Leerink analyst Ana Gupte wrote. She sees insurers spending less on drugs, and an enhanced role for private plans in the future. And Evercore ISI’s Ross Muken sees PBMs getting “incremental negotiating leverage” where they previously had none.

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