The Inflation Reduction Act and Ibrutinib

Charles L. Bennett, MD, PhD, MPP

Steven T. Rosen, MD

Gerard F. Anderson, PhD

In August 2024, the Centers for Medicare & Medicaid Services (CMS) announced a negotiated price for the Bruton’s tyrosine kinase inhibitor ibrutinib that is 38% lower than the manufacturer’s list price. This new price will go into effect in January 2026. Negotiations began following passage of the Inflation Reduction Act (IRA), which allowed the CMS to negotiate prices for 10 drugs in 2024. One of those drugs was ibrutinib, with more drug negotiations to follow in the coming years.

In February 2024, the CMS submitted an initial price to ibrutinib’s manufacturer to begin the negotiation.¹ The manufacturer responded in March with a counteroffer. During the spring and summer of 2024, the manufacturer and the CMS conducted negotiations. In July, the CMS reportedly sent a final offer to the manufacturer. In August, the negotiation period ended, and an agreed-upon maximum fair price was reached. The CMS followed up with a formal announcement of the negotiated maximum fair price, a 38% discount from the 2023 list price.

Inside the Negotiations

The Inflation Reduction Act’s authorizing legislation established a maximum fair price for drugs that have been on the market for several years. Determination of the maximum fair price for each drug is based in part on the number of years the drug has been marketed.² Negotiations are bound by an upper limit, which is either the current average net (post-rebate) price paid by Medicare Part D or a percentage of the non–Federal Average Manufacturer’s Price, whichever is lower. Because ibrutinib is 10 years past its initial U.S. Food and Drug Administration (FDA) approval date (in 2013), the statutory upper limit set for the maximum fair price was 40% of the non–Federal Average Manufacturer’s Price.³

Section 1194(e) of the Inflation Reduction Act requires the CMS to consider 10 factors as a basis for determining an offer and a counteroffer through negotiations (Table 1). After entering into the negotiation, under 1193(a) (4), ibrutinib’s primary manufacturer provided the CMS with proprietary data on the 10 factors listed in Table 1. The first four data elements in Table 1 were considered confidential and were redacted in a 2025 CMS summary report on the ibrutinib price negotiations.

TABLE 1: Ten Factors Considered in Supporting Negotiation of Maximum Fair Price

Adapted with permission from Bennett CL, Gibbons JB, Nabhan C, et al: The Inflation Reduction Act and etanercept. Arthritis Rheumatol. March 18, 2025 (early release online).

Following the CMS’s final guidance for the Inflation Reduction Act, the manufacturer reported data on the economic implications of ibrutinib in various settings and the demand for the drug in diverse populations. This information was communicated to the CMS by 20 selected organizations that are involved with diseases treated by ibrutinib. Additional information on some of the CMS components, with heavily redacted data tables, is available from a 2021 House Oversight Committee staff report on ibrutinib’s pricing and revenue. (Ibrutinib was among the 12 drugs evaluated initially by the Oversight Committee under the leadership of the late Elijah Cummings [D–Maryland] during a 3-year congressional investigation of the pricing of 12 high-priced drugs covered by Medicare.⁴) More information can be found in a 2023 report to the CMS from the Assistant Secretary of Planning and Evaluation on patient expenditures on ibrutinib and the other nine drugs included in the IRA’s initial list.⁵

The CMS administrator stated that weighing the importance of each of the 10 factors outlined in Table 1 could potentially yield steeper discounts. When originally scoring the Inflation Reduction Act legislation, the Congressional Budget Office estimated that negotiations would result in 8% lower average drug prices beyond the maximum fair price for drugs covered under Medicare Part D.

Under the Inflation Reduction Act, Congress mandated statutory starting points for initial negotiations for each of the 10 drugs were based on how long each drug had been marketed, with higher initial starting points for drugs marketed 16 years or longer of 40% of the non–Federal Average Manufacturer’s Price vs 75% for drugs approved by the FDA up to 16 years ago. Ibrutinib received its initial FDA approval in 2013; hence, the mandatory starting point was 75% of the non–Federal Average Manufacturer’s Price.

The Data Considered by the CMS

According to the House Oversight Committee 2021 report (and by inference the CMS in 2023), ibrutinib’s research costs were recovered by sales revenue. Internal documents indicated that research and development expenditures were $2.45 billion between 2013 and 2018 relative to $8.1 billion in U.S. net revenue. The House Oversight Committee noted that the manufacturer purchased ibrutinib for $21 billion in 2015. The FDA granted 14 Orphan Drug designations, including 8 indications that received FDA approval.⁴ The credit was equal to 50% of qualifying expenditures through the end of 2017 and 25% thereafter. Ibrutinib is considered a “blockbuster” drug, with $24 billion in sales (2017–2020).⁴

A CMS public listening session noted that companies owned by ibrutinib’s manufacturers funded 21% of preapproval clinical trials involving the drug.⁶ In 2023, AbbVie conducted three pediatric drug trials leading to a 6-month patent extension and additional regulatory exclusivities.

Ibrutinib was first approved by the FDA for mantle cell lymphoma. The 2021 House Oversight Committee staff found that, over time, ibrutinib’s manufacturers have received 88 additional patents.⁴ Pre- and postapproval patents were related to the method of treatment (46 and 56, respectively), formulation/combination (1 and 30, respectively), and crystalline composition (1 and 16, respectively). The patent pertaining to the composition of matter expires in 2027. Pediatric regulatory patent exclusivity and the method of treatment patent exclusivity extend until 2028 and 2031, respectively. Because of a corporate settlement negotiated with a generic manufacturer, generic entry into U.S. markets is delayed until 2032. The House Oversight Committee noted that ibrutinib’s manufacturing increased more slowly than its revenue.⁴

“From 2026 to 2032, pricing for ibrutinib will be based on the negotiated maximum fair price that will take effect in 2026, which may improve access for Medicare beneficiaries.”

— CHARLES L. BENNETT, MD, PhD, MPP, AND COLLEAGUES

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The CMS considered the opinions of patients, patient advocates, and researchers during a Medicare drug pricing, patient-focused listening session.⁶ Key takeaways included concerns that a lower negotiated price for Medicare Part D plans might limit coverage to non-negotiated products through utilization management programs; there might be negative impacts on innovation; and negotiated price discounts would not be passed on to patients.

According to the report by the Assistant Secretary for Planning and Evaluation, ibrutinib’s Medicare Part D gross costs in 2023 were $2.37 billion, and pre-Inflation Reduction Act manufacturer rebates were 10%.⁵ The negotiated price for a 30-day supply of ibrutinib for Part D enrollees in 2026 will be $9,319. Estimated savings in 2026 will be $600 million. The final negotiated price represents between a 35% and 39% discounted list price compared with other therapeutic options.¹

The 38% discount resulting from the negotiations is much smaller than that achieved for the other nine drugs in the Inflation Reduction Act negotiations (ranging from 56% to 79%). Comparative effectiveness considerations are included in the CMS 2025 report, but they were redacted.⁵ The National Comprehensive Cancer Network (NCCN) has identified three newer therapeutic alternatives for chronic lymphocytic leukemia.⁷ FDA-approved first-line alternatives include two newer Bruton’s tyrosine kinase (BTK) inhibitors (acalabrutinib and zanubrutinib), a BCL2 inhibitor (venetoclax), and an anti-CD20 monoclonal antibody (obinutuzumab). Ibrutinib has two important toxicities—bleeding risk and atrial fibrillation. The newer BTK inhibitors have been associated with lower toxicity.

The Negotiation Process Remains Uncertain

The review of publicly available data for some of the 10 factors in Table 1 that the CMS reportedly used to negotiate the 38% discounted list price was a nontransparent process. There are no explicit insights into how the negotiated maximum fair price was derived, although the CMS administrator outlined in brief how the negotiations went.⁶

Overall, the most important factors determining the final negotiated maximum fair price are unknown. Although the CMS probably considered the 10 factors previously mentioned, it is likely the totality of the data from the manufacturer, patients, and advocacy groups did not merit a price much lower than the ceiling. Patient concerns regarding the negotiated price combined with the manufacturer’s empirical data would seem to indicate the final price was arrived at after appropriate consideration of research, development, manufacturing, and production costs; comparative studies with therapeutic alternatives; unmet needs fulfilled by ibrutinib; patient access; and impact on racial/ethnic minorities, pediatric patients, persons with comorbidities, and rural individuals. It is possible that the CMS and Janssen may have thought that negotiating a much larger discount would adversely affect pharmaceutical innovation and access to ibrutinib in some managed-care and fee-for-service Medicare plans.

Outlook for the Future

From 2026 to 2032, pricing for ibrutinib will be based on the negotiated maximum fair price that will take effect in 2026, which may improve access for Medicare beneficiaries. Commercial payers will not be bound by the maximum fair price, however, and there may be some competitive downward pressure on the price they pay when generic formulations become available. The manufacturer of ibrutinib may need to offer greater rebates for commercial payers to maintain its formulary position if pharmaceutical benefit management programs start to favor the lower costs of its competitors. Finally, since at least two biosimilar formulations for ibrutinib will be on the market in 2032 and will exert downward pricing pressure, the cost of ibrutinib paid by the CMS is likely to decrease in 2032 from the final negotiated maximum fair price that will be in place from 2026 to 2032.

Some may wonder whether a more discounted final price could have been derived based on comparison of European and Canadian prices. Some policymakers propose that the current Administration may move away from the Inflation Reduction Act price negotiation process to pricing based on international comparisons. The U.S. final maximum fair prices differ from prices in Australia, Canada, France, Germany, Japan, Switzerland, and the United Kingdom, which are 25% to 80% lower for etanercept and 2% to 74% lower for ibrutinib.⁸ Such changes might lead to savings in terms of resources and time to negotiate maximum fair prices as well as to lower them based on the difference between maximum fair prices negotiated for each of the 10 drugs in the Inflation Reduction Act 2024 list vs prices in high-income European countries.

Some analysts propose CMS price negotiation should include prices reflecting lower prices in high-income countries in Europe, Canada, and Japan. A proposal based on foreign cost comparisons was outlined in 2020 during the first Trump Administration (focusing on 50 Medicare Part B drugs and a Most Favored Nation Pricing scheme [ie, price set for Medicare Part B drugs at the lowest prices offered by manufacturers in other countries]).⁹ This was challenged in federal courts and blocked, and it was eventually rescinded by the Biden Administration in December 2021.

Drug price negotiations were also discussed in 2021 by the House Oversight Committee and then outlined in proposed HR-3 legislation as HR3, the Elijah Cummings Lower Drug Costs Now Act.¹⁰ This established prices for 25 drugs and 50 single-source brand drugs at no more than 120% of the average price in Australia, Canada, France, Germany, and the United Kingdom. Most Favored Nation pricing was again described in a 2025 Executive Order from the current Administration (titled Delivering Most Favored Nation Drug Pricing to Americans) as well as by a bipartisan group of U.S. senators who introduced the Fair Prescription Drug Prices Act for Americans Act (FPDP Act).^11,12 The FPDP Act was initially introduced in 2023, but it failed to gain the necessary support at that time.¹³

The FPDP Act and the Most Favored Nation pricing Executive Order were developed in part by the current Administration’s renewed focus on reshoring drug production and lowering drug costs. Opposition by trade groups has focused on their contention that enactment of maximum fair pricing would result in $1 trillion in lost revenue for pharmaceutical manufacturers and potentially harm Medicare patients, state Medicaid programs, health insurers, and hospitals. The next year will certainly be an interesting one with respect to pharmaceutical pricing.

Acknowledgment: The authors would like to acknowledge helpful comments on early versions of this manuscript by Antonio Trujillo, PhD, of the Johns Hopkins Bloomberg School of Public Health in Baltimore.

DISCLOSURE: This research was supported by unrestricted grants from Arnold Ventures (GFA) and the National Cancer 1R01CA102713-01 (CLB). The funding organizations had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication. Dr. Bennett, Dr. Rosen, and Dr. Anderson reported no conflicts of interest.

REFERENCES

1. H.R.5376–117th Congress (2021–2022): Inflation Reduction Act of 2022. Available at https://www.congress.gov/bill/117th-congress/house-bill/5376. Accessed July 23, 2025.
2. Gibbons JB, Bennett CL, Carson KR, et al: Adjusting starting points for initial price offers: The example of ibrutinib. Am J Manag Care 30:193-196, 2024.
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8. Gumas ED, Huffman P, Papanicolas I, et al: How prices for the first 10 drugs up for Medicare price negotiations compare internationally. The Commonwealth Fund. January 4, 2024. Available at https://www.commonwealthfund.org/publications/2024/jan/how-prices-first-10-drugs-medicare-negotiations-compare-internationally. Accessed July 23, 2025.
9. Keith T: Trump signs new Executive Order on prescription drug pricing. NPR. September 13, 2020. Available at https://www.npr.org/2020/09/13/912545090/trump-signs-new-executive-order-on-prescription-drug-prices. Accessed July 23, 2025.
10. H.R.3–117th Congress (2021–2022): Elijah E. Cummings Lower Drug Costs Now Act. Available at https://www.congress.gov/bill/117th-congress/house-bill/3. Accessed July 23, 2025.
11. Executive Order 14297: Delivering most favored nation prescription drug pricing to American patients. 90 FR 20749. Signed May 12, 2025. Available at www.govinfo.gov/content/pkg/FR-2025-05-15/pdf/2025-08876.pdf. Accessed July 23, 2025.
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13. S.1218. Fair Prescription Drug Prices for Americans Act. 118th Congress (2023–2024). Available at https://www.congress.gov/bill/118th-congress/senate-bill/1218. Accessed July 23, 2025.

Dr. Bennett is Professor, Department of Clinical Pharmacy and Outcomes Sciences (CPOS), College of Pharmacy, at the University of South Carolina, and an affiliate investigator with the John and Laura Arnold Program on Pharmaceutical Cost and Access, Department of Health Policy, Johns Hopkins Bloomberg School of Public Health, Baltimore. Dr. Rosen is Professor, Division of Lymphoma, Department of Hematology & Hematopoietic Cell Transplantation, and Executive Vice President and Director Emeritus, Comprehensive Cancer Center and Beckman Research Institute of City of Hope, Duarte, California. Dr. Anderson is Professor of Health Policy and Management and Professor of International Health at the Johns Hopkins University Bloomberg School Public Health, Professor of Medicine at the Johns Hopkins University School of Medicine, and Director of the Johns Hopkins Center for Hospital Finance and Management, Baltimore.