EPIC Act Would Be A Multi-Billion Dollar Pharma Windfall At The Expense of Seniors
By Sarah Karlin-Smith
Key takeaways:
Big Pharma is pushing to undermine Medicare drug price negotiation and let corporations price gouge for longer periods, potentially costing taxpayers and patients tens of billions of dollars.
Longer delay periods proposed under the EPIC Act would shrink the time negotiated prices are available for some drugs, while eliminating Medicare drug price negotiations entirely for others.
Six out of the eight (75%) small molecule drugs selected for Medicare drug price negotiations this year, representing more than $11 billion in annual Medicare spending, would have been excluded had the EPIC Act been in place.
- The Inflation Reduction Act (IRA) for the first time empowers Medicare to negotiate drug prices directly with pharmaceutical manufacturers.
- The Congressional Budget Office (CBO) estimated that in the first six years negotiated drug prices are available through Medicare, the government will save nearly $100 billion.
- Medicare enrollees will save billions more through lower premiums and reduced out-of-pocket costs that stem from negotiations.
- Medicare has already negotiated lower prices for 25 drugs, and this year it is negotiating with manufacturers of 15 more drugs to obtain lower prices.
Big Pharma aims to Undermine Drug Price Negotiations
- Now, through the EPIC Act, drug corporations are pushing to gut the law so patients would be forced to wait years longer before receiving price relief on expensive drugs.
- When Congress passed Medicare drug price negotiation, Big Pharma was able to extract a major concession: Medicare negotiated prices for new drugs would not be available until they had been on the market for 9 years (or in some cases longer).
- Now pharmaceutical companies are maneuvering to delay negotiation even longer.
- Lengthening the negotiation delay period would keep prices higher for longer, costing taxpayers and patients tens of billions of dollars.
Impact of Pharma’s Proposed Delay on Drugs Selected for Negotiation
Medicare would have been prohibited from negotiating prices for six out of the eight small molecule drugs selected in 2026 for the third round of Medicare’s Drug Price Negotiation Program (MDPNP) if the 13-year delay that Big Pharma is pushing was already included in the law, costing seniors and taxpayers billions of dollars (see Table 1).
Previous analysis found that had EPIC been in place, Medicare would have been prohibited from negotiating lower prices for five out of the 10 drugs selected in the first year of the program, representing more than $37 billion in annual gross Medicare Part D spending, and eight out of the 15 drugs selected in its second year, representing more than $28 billion in annual Medicare spending.
The latest group of small molecule drugs selected for Medicare’s price negotiation program highlights that pharma companies get too many years of government-granted monopoly pricing power, not too little. If EPIC was implemented the pocketbooks and health of hundreds of thousands of Americans who struggle with cancer, HIV, depression, Alzheimer’s and schizophrenia would suffer at the expense of multi-billion and even trillion-dollar drug companies that have more than earned a fair return on investment on the medications at issue.
Small molecule drugs are eligible for selection to the MDPNP seven years after FDA approval, with the negotiated prices taking effect nine years post approval. In comparison, biologic drugs currently get 11 years on the market before they are eligible for MDPNP selection, with the negotiated price not taking effect until year 13. The drug industry and its allies in Congress argue that this difference makes small molecule treatments subject to a “pill penalty,” that will disincentivize the research and development of these medicines.
But the “pill penalty” is nothing more than a pharma industry myth. Research has found that the trend of venture capital investment in small molecules has not dropped since the MDPNP’s passage. Instead, investment is going up. More broadly, there is no evidence that the IRA has negatively impacted the willingness of investors or companies to invest in pharmaceutical development.
On the other hand, there is ample evidence that biologics do not need extended protection from price negotiations compared to small molecules. A better solution for patients and taxpayers would be for Congress to eliminate the negotiation delay period and allow for negotiation of all brand name small molecule and biologic treatments as soon as they reach the market.
Most countries negotiate the prices of brand name drugs shortly after their launch. The IRA’s drug price negotiation efforts, while meaningful, are still far too generous to the drug industry. The small molecule drugs selected this year for negotiation will have had anywhere from 10 to 16 years of market monopolies before government-negotiated prices take effect (and will continue not to face generic competition until patents and exclusivities expire or are ruled invalid, even after negotiated prices take effect). Yet in just one year many of these drugs account for enough net revenue in the U.S. alone to cover the industry’s exaggerated estimate of the $2.8 billion it says it costs to bring a drug to market, which factors in the risk of failure and costs of foregone profits from other capital investment. All of the drugs that would be delayed in negotiation by EPIC easily make enough in a year to cover the median total R&D costs of $150 million estimated by independent experts.
Delaying the negotiation of small molecule drugs as called for under EPIC would result in some of these drugs never having a negotiated price as generic competition would come on the market before or during the negotiation period, such as in the case of Johnson & Johnson’s prostate cancer treatment Erleada. The timing of Erleada generic entry would be doubly problematic as Medicare would still be forced to select Erleada for negotiations in early 2030. Once generics enter in September of that year, if CMS determines that the generics are being “bona fide” marketed, Medicare must suspend negotiations. However, Medicare would not be able to replace Erleada with another drug eligible for negotiation, meaning Medicare loses out on savings from lowering the price of another monopoly product for seniors. In other cases, like with Eli Lilly’s Verzenio for breast cancer, the government would go through the time and effort of negotiation only for generic competition to launch about the same time, meaning the government would get little benefit from the time and effort it spends negotiating the cost of the drug.
These cases are not anomalies. Studies have shown that small molecule drugs typically enjoy market exclusivity for around 12–14 years before generic competitors enter the market. Indeed, even with current delay periods, three out of the 10 drugs selected in the first year of the negotiation program will be removed from it after only one year of negotiated prices being in place.
While negotiation delay periods prohibit the government from negotiating lower prices for drugs newly on the market, drug corporations are spiking drug launch prices to new heights year after year. Drug corporations set the median list price for newly launched drugs in 2024 at $370,000, up from $300,000 in 2023, which was up from $220,000 in 2022, and $180,000 in 2021. From 2008 to 2021, drug companies increased drug launch prices exponentially by 20% per year. Further reforms that build on the progress of IRA to address prescription drug prices at launch are needed.
An overwhelming majority of Americans support Medicare negotiating prices for more drugs, not exempting more drugs from negotiation. Policymakers should reject attempts from Big Pharma and its allies to weaken Medicare drug price negotiation and instead strengthen the program, including by eliminating negotiation delay periods.
Table 1: Small Molecule Drugs Selected for Medicare Drug Price Negotiation Program, Initial Payment Applicability Period (IPAY) 2028
| Drug | Negotiation Eligibility Under EPIC (selection year/initial price application year) | Medicare Spend (Part B & D from 11/2024-10/2025)[i] | Total Medicare Beneficiaries (11/2024 – 10/2025) | 2025 U.S. Net Revenue | 2025 Worldwide Net Revenue | Total Lifetime Net Revenue[ii] | Expected Generic Entry |
| Biktarvy (bictegravir/emtricitabine/tenofovir alafenamide) (Gilead) | 2031 (IPAY 2033) | $3.904B | 101,000 | $11.467B | $14.334B | $71.802B | 4/1/2036 |
| Erleada (apalutamide) (J&J) | 2030 (IPAY 2032) | $1.948B | 19,000 | $1.453B | $3.574B | $13.224B[iii] | 9/2030 |
| Kisqali (ribociclib) (Novartis) | 2029 (IPAY 2031) | $1.578B | 17,000 | $2.975B | $4.783B | $13.542B | 2031[iv] |
| Verzenio (Eli Lilly) | 2029 (IPAY 2031) | $1.429B | 15,000 | $3.464B | $5.723B | $20.475B[v] | 2031 |
| Lenvima (Lenvatinib) (Eisai) | 2028 (IPAY 2030) | $1.088B | 10,000 | $1.5B[vi] | $2.063B[vii] | $10.687B[viii] | 7/1/2030 |
| Rexulti (brexpiprazole) (Otsuka, Lundbeck) | 2027 (IPAY 2029) | $1.075B | 119,000 | $1.93B[ix] | $2.088B | $9.12B | 4/12/2033 |
Methods/Sources: Negotiation eligibility under EPIC was determined by looking at the first approval date for a non-orphan indication of the drug at FDA’s drugs@FDA database. Medicare’s IPAY 2028 fact sheet was used to get data on Medicare Part B and D prescription drug expenditures and number of Medicare enrollees who used the drug. Drug company SEC filings (10-K, 20-F) and other financial reports were used to obtain 2025 U.S. revenue figures, 2025 worldwide revenue figures and lifetime revenue figures. A combination of drug company SEC filings, court documents, press releases and FDA Orange Book patent data were used to determine the date of expected generic entry.
[i] Medicare spend is gross spending
[ii] Lifetime revenue calculated through December 2025
[iii] JNJ did not break out 2018 sales for Erleada (drug approved 2/14/2018)
[iv] Absent clear information disclosed by company, or lawsuit, estimated drug would face generic competition 13 years after launch based on this research: https://www.tandfonline.com/doi/full/10.1080/13696998.2021.1952795#abstract
[v] Lilly did not break out 2017 sales for Verzenio (drug approved 9/28/2017)
[vi] Data is from fiscal year ending 3/31/2025 (FY2024) for North America
[vii] Data is from fiscal year ending 3/31/2025 (FY2024)
[viii] Lenvima was approved 2/13/15. 2015 sales used in total do not include February and March of 2015
[ix] All Rexulti revenues taken from Otsuka’s filings