J&J IRA pricing offer is in, as it sticks with 2025 guidance

Johnson & Johnson has three of its top-selling drugs in Medicare pricing negotiations – Stelara, Xarelto, and Imbruvica – but has said it does not expect a major hit to its finances next year.

During the pharma group's first-half results update, Jennifer Taubert, chair of J&J's worldwide innovation group, said that it is projecting a "net unfavourable impact" from the negotiations in 2025, but expects growth in other areas of its business to compensate.

Stelara (ustekinumab) is used to treat a range of inflammatory disorders – including psoriasis, psoriatic arthritis, Crohn's disease, and ulcerative colitis – and brought in worldwide sales of $5.34 billion in the first half of this year. It will start to face biosimilar competition in Europe this month, according to J&J's chief financial officer Joseph Wolk.

Pfizer-partnered anticoagulant Xarelto (rivaroxaban), meanwhile, contributed $1.11 billion in the same period, while J&J booked $1.55 billion from sales of blood cancer therapy Imbruvica (ibrutinib), partnered with AbbVie.

The three drugs have been included among the first 10 medicines subject to the first round of Medicare pricing negotiations, a controversial programme introduced as part of the Biden administration's Inflation Reduction Act, making J&J one of the most exposed companies to the legislation at present. Future editions of the list will see the number of drugs included rise sharply to around 50 a year.

After the negotiation period, the new prices will be announced on 1st September 2024 and will go into effect on 1st January 2026 – assuming the pharma industry continues to be unsuccessful in various lawsuits challenging the initiative on constitutional and legal grounds. J&J's lawsuit was thrown out by a New Jersey judge in April, although it has just filed an appeal against the verdict.

"We have received the final numbers from the government," confirmed Taubert, although she said J&J would not be disclosing the result of the negotiations early.

"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 [and] still look very good to us today," she added.

J&J reported overall revenues up 4.3% to $22.4 billion in the second quarter, fuelled by growth for blood cancer therapy Darzalex (daratumumab) and particularly subcutaneous version Darzalex Faspro, as well as cancer drug Erleada (apalutamide) and Stelara follow-up Tremfya (guselkumab).

Chief executive Joaquin Duato said that J&J has a "strong foundation for near and long-term growth", thanks to a robust pipeline, important upcoming regulatory decisions for Tremfya in inflammatory bowel disease (IBD) and Rybrevant (amivantamab) in EGFR-positive non-small cell lung cancer (NSCLC), as well as developments in medtech like its $13.1 billion acquisition of Shockwave.