Newsletter · · Ashutosh Agarwal
Half of IRA Round 1 Drugmakers Already Cut List Price and AbbVie Drops Imbruvica to the Negotiated Rate - Healthcare Policy: Drug Pricing, IRA & Managed Care - Week of May 25 – June 1, 2026
Drug pricing and IRA newsletter for the week of May 25 to June 1, 2026. Five of the ten Round 1 manufacturers have already cut list price, with AbbVie's Imbruvica taken all the way down to MFP, the first concrete sign the IRA bleeds into commercial gross-to-net.
Healthcare Policy: Drug Pricing, IRA & Managed Care
Week of May 25 – June 1, 2026: Half of IRA Round 1 Drugmakers Already Cut List Price and AbbVie Drops Imbruvica to the Negotiated Rate
TL;DR
- Five of the ten Round 1 manufacturers have already lowered list price, with AbbVie's Imbruvica taken all the way down to MFP, the first concrete sign that the IRA bleeds into commercial gross-to-net, not just Medicare.
- Forty drugs are now on the negotiation list and the 2028 cohort includes Part B for the first time, confirmed by a former HHS/CMS general counsel, who is still calling Round 1 P&L impact "too soon to tell" at 5.5 months in.
- A quiet week. Three episodes touched IRA at all out of ~500 scanned. No new GLP-1 (NVO/LLY) tape, no Stelara biosimilar update, no EPIC Act movement. If you need GLP-1 or biosimilar signal this week, the podcast tape is dry.
What's New
1. ABBV took Imbruvica's WAC to MFP, and PBMs will follow it down. Stephen Miller, VP of Pharmacy Services at 340B Health and the most operator-y voice of the week, said on the May 27 episode of 340B Insight that "half of the manufacturers for the 2026 drugs, so 5 of the 10, lowered their WAC or wholesale acquisition cost price significantly. Some all the way down to MFP as I talked about the example with AbbVie's [Im]bruvica" (340B Insight, May 2026). His non-obvious read-through: "Insurance, PBMs are going to max the reimbursement down to that rate as well", i.e. the IRA price effectively leaks into commercial reimbursement once WAC moves. This is the tradeable insight of the week; check whether MRK (Januvia), BMY/PFE (Eliquis), AZN (Farxiga), and LLY (Jardiance) have made comparable WAC moves.
2. Round 2 manufacturers are taking modest 2026 price. Same episode: Round 2 list prices have risen "0% to 6%, with most in the 2-4% range" for 2026 (340B Insight, May 2026), well below the historical 6–8% playbook, consistent with manufacturers managing optics into negotiation. Miller also flagged that 4 of the 10 Round 1 drugs will drop off the IRA list at the start of 2027 per CMS guidance, which begins to set up the LOE/biosimilar cliff narrative.
3. Forty drugs on the list; Part B in the 2028 cohort. Tom Barker (Foley Hoag partner, former Acting GC of HHS, former CLO of CMS) on DC EKG with Joe Grogan (former Trump White House DPC director): "There are now 40 drugs that have been selected for negotiation... this year, for the first time, Part B drugs are subject to negotiation" (DC EKG, May 2026). The Part B inclusion is the structural change that opens up physician-administered oncology and immunology franchises, most obviously Keytruda's IV formulation for MRK in 2028.
4. MFN models are coming, but still undefined. Barker: "the B and D models are going to be mandatory, and those are going to take effect at some point in the next year or so" (DC EKG, May 2026), referring to the "Globe" and "Guard" Part B demonstrations and the "Generous" Part D model. Richard Pops, CEO of Alkermes, on The BioCentury Show: "We don't know what MFN actually is... based on the 17 bespoke deals that have been done, is there a central tendency among them or is each of them actually a bespoke deal?" (The BioCentury Show, May 2026). Translation: MFN remains a fat-tail risk the market cannot price.
5. Part D premium cap is the unspoken 2027 risk. Barker flagged that Part D "premiums are artificially capped... When that cap comes off, there is the potential for a huge increase in Part D premiums" (DC EKG, May 2026), a sleeper read-through for the MA-PD plan economics at UNH, CVS (Aetna), CI, and HUM.
The Debate
Bull (manageable modeled headwind). Round 1 is 5.5 months in and Barker, an actual former CMS general counsel, is still saying "it's too soon to tell" (DC EKG, May 2026). Round 2 manufacturers are taking single-digit list price into negotiation, four of the Round 1 drugs roll off the list in 2027, and the actual MFP cuts are already in every sell-side model. The story is well-known and largely priced.
Bear (structural US margin compression with a small-mol R&D pullback). The tape from operators argues the cost is bigger than priced in three directions. One, commercial gross-to-net is now coupled to MFP: once WAC drops, PBMs reset reimbursement, so the IRA is not a Medicare-only headwind. Two, the pill penalty is rewriting the R&D mix; Pops' framing is the clearest articulation of the capital-allocation math: "Post IRA, nine years of exclusivity versus 13 years of exclusivity. If you draw a curve of the revenue profile of a drug over its life with the ramp and the plateau and you clip off the back four years, that's half of the revenues. So from a purely economic perspective, you should develop biologics instead of small molecules" (The BioCentury Show, May 2026). Three, mandatory MFN Part B and Part D models on a 12-month horizon, plus Part B negotiation in the 2028 cohort, layer two more leg-downs onto US franchise NPVs. Bear take: today's MFP is a floor, not a ceiling.
Stocks in Play
| Ticker | Bull | Bear | Next Catalyst / Watch |
|---|---|---|---|
| ABBV | Imbruvica is shrinking anyway under Calquence/Brukinsa competition; WAC-to-MFP is incremental, not fatal. | First named-drug example of WAC fully cut to MFP; commercial gross-to-net on Imbruvica re-rates lower. Linzess in Round 2 (2027). | Whether ABBV signals similar repricing on Venclexta or Linzess; Linzess MFP publication late 2026. |
| MRK | Subcutaneous Keytruda extends franchise exclusivity past 2028 if uptake is strong. | Part B is in the 2028 cohort. IV Keytruda is the prototype Part B IRA target. Januvia/Janumet already on Round 1. | 2028 selected drug list (Part B); SC Keytruda share trajectory. |
| BMY / PFE | Eliquis MFP is already in numbers; Pomalyst and Ibrance are smaller. | Eliquis MFP live 1/1/26; if WAC follows Imbruvica down, commercial reimbursement compresses too. | PFE/BMY WAC actions on Eliquis (analog to ABBV/Imbruvica). |
| LLY | Jardiance is co-developed with BI; LLY's exposure is partial; GLP-1 franchise is the actual story. | Jardiance on Round 1; tirzepatide/Mounjaro/Zepbound is the obvious Round 3 candidate when it crosses the 7-year small-molecule clock. | Round 3 (2029) selected list; pill penalty messaging on orforglipron. |
| NVO | NovoLog MFP already digested; semaglutide negotiation is years out. | If Ozempic/Wegovy is on the Round 2 list (2028 effective), the franchise NPV compresses materially. | Confirmation of semaglutide on the 2028 list. |
| AZN | Farxiga is co-promoted; Tagrisso has biologic-adjacent durability. | Farxiga MFP live 1/1/26; Calquence is a Round 2 candidate. | AZN WAC action on Farxiga. |
| TEVA | Direct beneficiary of Round 1 LOE rolloffs in 2027 via biosimilars/generics. | Austedo is a 2028 Round 2 selection candidate. | 2028 list confirmation for Austedo. |
No episode this week named a per-franchise revenue-at-risk number. These are watch items, not fresh estimates.
Read-Throughs
- PBMs / managed care (CVS, CI, UNH, HUM). Miller's claim that PBMs will "max the reimbursement down to that [MFP] rate" (340B Insight, May 2026) is a net-neutral-to-positive read for Caremark/ESI/Optum Rx (lower acquisition cost), but Part D plan economics get more complicated when the premium cap rolls off. Watch 2027 MA-PD bids.
- Hospitals / 340B (HCA, THC, CYH). The 340B ceiling-price lag is two quarters: Jan 1 WAC cuts hit hospital 340B savings July 1. Litigation update from Barker: HRSA rebate model struck down in Maine (Dec 2025 proposal); new RFP comment period closed; state-law preemption wins for manufacturers in North Dakota and the 4th Circuit on West Virginia (DC EKG, May 2026). 340B is now an "$80 billion program", larger than every drug program except Part D.
- Small-mol biotech (ALKS, VRTX, INCY, mid-cap pipelines). Pops disclosed that the original Part D catastrophic-phase manufacturer liability change "would have taken us from a 0% liability to a 20% tax on our revenues. It would have taken us from being profitable to being not profitable" (The BioCentury Show, May 2026). Mid-cap small-molecule names with concentrated Part D exposure remain the most idiosyncratic risk under the structural IRA architecture.
- Ex-US / European launch strategy. Pops surfaced a subtle MFN exposure for companies that don't sell in Europe: if a competitor does at a lower price, rebate clawbacks could still apply. Not modelable yet but worth tagging.
What Changed vs Last Week
This is the inaugural run of this newsletter, no prior week to compare against. Going forward, we will flag delta-vs-prior-week here. If a future week is quiet, we'll say so plainly.