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Adjusting Starting Points for Initial Price Offers: The Example of Ibrutinib

The American Journal of Managed CareApril 2024
Volume 30
Issue 4
Pages: 193-196

Ibrutinib has been selected for Medicare price negotiation under the Inflation Reduction Act. The authors summarize the House Oversight Committee investigation to be considered by CMS during the price negotiation process.


The Inflation Reduction Act of 2022 (IRA) allows the Medicare program to negotiate drug prices beginning in 2024. Based on the guidance in the statute, CMS has selected specific data items to use to adjust initial price offers for 10 drugs in the decision-making process. Although much of the data are publicly available, some of these data items will need to be collected directly from drug companies. A 2019 US House of Representatives Committee on Oversight and Accountability investigative report collected a wide range of data from manufacturers of 12 high-revenue drugs that show what is available from the drug companies, including development costs, marketing, pricing, competition, and patent status. This article focuses on the data obtained for ibrutinib, an oral medication for treating hematologic malignancies, which is one of the only drugs reviewed by the committee that also has been selected for Medicare price negotiation. We examine data that can be obtained only from the drug manufacturer that the IRA has explicitly identified as being used to determine the price and suggest potential negotiation strategies for CMS in response.

Am J Manag Care. 2024;30(4):193-196. https://doi.org/10.37765/ajmc.2024.89531


Takeaway Points

  • This review focuses on ibrutinib, 1 of 12 high-revenue drugs evaluated by the US House Committee on Oversight and Accountability in hearings held from 2019 to 2021.
  • Ibrutinib was selected for Medicare price negotiation under the Inflation Reduction Act of 2022.
  • The review summarizes the data included in the committee’s report that CMS could use to adjust its initial price offer for ibrutinib.


Under the Inflation Reduction Act of 2022 (IRA), Medicare will negotiate prices for 10 branded drugs beginning in 2024, with more drugs to be considered in later years.1 The IRA guides the secretary of HHS on what data to collect from patients and manufacturers to assist CMS with drug selection, initial price offers, data that will be used to adjust initial price offers, and subsequent negotiations. Some adjustment data are publicly available, but other related data are nonpublic and must be obtained directly from drug companies. The IRA specified the data elements that must be collected directly from the drug companies, including (1) manufacturer research and development costs and how much of these costs have been recovered by past sales, (2) production and distribution costs, (3) the role of any federal financing in the research and development of the drug, (4) the degree to which patents or exclusivity provisions protect the branded drug’s place in the market, and (5) advantages of the drug relative to therapeutic competition.2

In 2021, the US House of Representatives Committee on Oversight and Accountability (hereafter, the House Oversight Committee) investigated 12 high-revenue drugs commonly administered to Medicare beneficiaries. As part of the investigation, more than 170,000 pages of industry documents were reviewed. Findings from the investigation were summarized in a House Oversight Committee majority report, minority report, and a series of drug-specific reports. This article summarizes the findings covered in the majority report and the ibrutinib-specific report (hereafter, “the reports”). The minority report does not focus on ibrutinib and a discussion of the report is therefore omitted from this article. The reports identified specific methods manufacturers used in patents, marketing, pricing, and executive compensation to drive revenue.3-6 One of the 12 drugs included in the reports, ibrutinib (Imbruvica), a treatment for patients with hematologic malignancies, was selected by CMS on September 1, 2023, for inclusion in the first round of Medicare drug price negotiations.7 Ibrutinib is in the top 50 highest-revenue drugs in Medicare Part D, has no generic competitors, and is a small molecule drug that has been marketed for more than 7 years. These factors were outlined in the IRA legislation for determining which 10 drugs would be included in the September 1, 2023, list from CMS. At least 1 estimate has suggested that CMS could guarantee a 34% reduction in ibrutinib’s price if selected for negotiation.8

Our review summarizes data collected in the House Oversight Committee report specific to ibrutinib that may be used to adjust the initial price offer proposed by CMS in 2023. The facts and circumstances of ibrutinib used in negotiation may also be relevant to the negotiation process for other drugs selected. Further, the report demonstrates what data are available directly from drug companies.


We analyzed data submitted to the House Oversight Committee between 2019 and 2021 by the manufacturer of ibrutinib as part of its investigation of 12 expensive drugs that Medicare pays for. The minority and majority overall staff reports and the focused report on ibrutinib were used to identify all text where ibrutinib was discussed and to make a list of all relevant facts that could be obtained directly from the drug companies. From these reports, we analyzed data that could be tied to 1 or more of the 5 data elements described above that have been explicitly included as items to be used to adjust initial price offers for each of the 10 drugs. Next, we sorted information in the House Oversight Committee’s reports into the most relevant 5 data elements. We ultimately reviewed information specific to 3 of the 5 data elements: (1) recovery of research and development costs, (2) product and distribution costs, and (3) patents or other exclusivity provisions. We summarize our findings regarding these 3 elements below.


Research and Development Costs

According to the staff reports, all research costs for ibrutinib incurred by the manufacturer were recovered by subsequent sales revenue.3,4 Specifically, internal corporate nonpublic documents indicate that ibrutinib research and development expenditures were $2.45 billion between 2013 and 2018 relative to $8.1 billion in total US net revenues for ibrutinib.3 This revenue estimate does not include international revenues. The House Oversight Committee reports also note that ibrutinib’s current manufacturer, AbbVie, purchased the rights to ibrutinib from Pharmacyclics through acquisition in 2013 after ibrutinib had received FDA approval and was financially successful, meaning that its current sponsor did not contribute directly to original development costs of the drug.3

Production and Distribution Costs

The House Oversight Committee staff reports on ibrutinib state that manufacturing costs for each of the 12 investigated drugs rose significantly slower than revenue.3 Although the reports do not explicitly provide actual manufacturing cost data for each drug, this information was sent from ibrutinib’s manufacturer to the House Oversight Committee to reach this finding.

Patents or Exclusivity Provisions

The FDA initially approved ibrutinib as a treatment for mantle cell lymphoma in 2013. The House Oversight Committee reports found that, over time, the manufacturers of ibrutinib had obtained 88 patents on it.3 Most of these patents were filed after the initial FDA approval of ibrutinib in 2013. For example, the manufacturer obtained additional patents for new dosing schedules for ibrutinib treatment of chronic lymphocytic leukemia (CLL) and Waldenström macroglobulinemia after it had already been approved.3 It also obtained 7 new orphan designations years after initial approval, each of which grants an additional 7 years of exclusivity under the Orphan Drug Act.3 Finally, the reports note that a Paragraph IV settlement9 with prospective generic entrants effectively generated 6 additional years of branded ibrutinib market exclusivity.3 The reports concluded that the manufacturer’s combined actions have frozen market competition for 30 years.


The House Oversight Committee staff reports on ibrutinib provide insights into the availability of empirical data for 3 of 5 categories of product-related information that will serve as adjustment factors for modifying the starting price points of each of the 10 drugs selected for negotiation on September 1, 2023. Information identified in the report may also be useful for validating information obtained from manufacturers in future requests. Ultimately, information from the reports and newly obtained documents will guide CMS to an initial price offer with the sponsor. We discuss below possible negotiation strategies that CMS could pursue based on information in the reports.

Research and Development Costs

As noted in the House Oversight Committee reports, ibrutinib’s current manufacturer did not contribute to the original development of the drug by its initial manufacturer, and overall ibrutinib-related revenue exceeded all additional research and development costs since the acquisition of the initial manufacturer Pharmacyclics by the current manufacturer. Even if CMS were to consider the acquisition cost of Pharmacyclics in this calculus, it is unlikely that it would dwarf the substantial revenue obtained by ibrutinib’s current manufacturer. CMS could leverage this point by adjusting the initial price offer for ibrutinib. For example, it might select an initial bid that includes only research and development conducted post acquisition and possibly some portion of the acquisition costs of Pharmacyclics. Additional research and development costs for other drugs produced by ibrutinib’s current manufacturer subsidized by ibrutinib sales might also be considered.

Consideration of Patents or Exclusivity Provisions

Ibrutinib’s manufacturer acquired 88 secondary patents for the drug. Although patent data for ibrutinib were publicly available, they were not found in a single data source. CMS can leverage data from the House Oversight Committee reports around the number, complexity, and innovativeness of patents held by ibrutinib’s manufacturers and the likely potential impacts of these patents on prospective generic entry. Specific information regarding Paragraph IV settlements entered into by ibrutinib’s manufacturer and prospective generics were not in the public domain nor reviewed in detail by the House Oversight Committee. In the future, this information should be collected because it would assist in adjusting the starting price point for ibrutinib to the price that will be proposed as the initial price offer.

Production and Distribution Costs

The information on ibrutinib suggested that its production costs were a small portion of its total cost. However, empirical data on production and distribution costs for ibrutinib would be helpful to CMS as it adjusts the starting price point to the initial price offer for ibrutinib. These data must be obtained directly from the manufacturer of ibrutinib and were not included in the information we reviewed that was reported in the House Oversight Committee reports.

Advantages of Therapeutic Competition

CMS will adjust the initial starting point price for ibrutinib based on multiple factors, including comparative effectiveness and the other data elements reviewed earlier. Although not covered directly in the House Oversight Committee staff reports, branded therapy competition for ibrutinib will be essential to consider. Ibrutinib is now 1 of 3 FDA-approved medications in the therapeutic class it initially defined, covalent Bruton tyrosine kinase inhibitors. Based upon head-to-head randomized clinical trial data demonstrating superior efficacy and an improved safety profile,10,11 clinical practice guidelines prefer branded competitors (zanubrutinib [Brukinsa] and acalabrutinib [Calquence]) over ibrutinib in the initial treatment of CLL and small lymphocytic lymphoma.12 Further, the FDA approved a noncovalent Bruton tyrosine kinase inhibitor, pirtobrutinib (Jaypirca), in January 2023.13 The manufacturer of ibrutinib may have unpublished studies comparing its drug’s effectiveness with that of alternatives. Overall, these comparative effectiveness considerations suggest that the initial price offer for ibrutinib will be lower than the current prices for its competitors, each of which is currently higher priced than ibrutinib and also supported by data showing that these agents are more effective and less toxic than ibrutinib.

Existing and future competition to ibrutinib gives HHS additional leverage in negotiating an initial price offer. However, HHS should carefully consider potential changes in market share for ibrutinib following entry; if new entrants successfully challenge ibrutinib, then cost savings based on the negotiated initial price may be affected. Information on new drugs developed for ibrutinib’s clinical indications should be reviewed. Any internal documents that ibrutinib’s manufacturer has used to determine the comparative effectiveness of ibrutinib relative to its competitors should also be considered. Several published studies compare the effectiveness of ibrutinib and other drugs used for the same indications. However, drug companies that manufacture ibrutinib competitors conduct their own research, and, in many cases, these results are not published.


Nonpublic information for ibrutinib obtained by the House Oversight Committee is relevant to data elements that CMS will consider as it negotiates an initial price offer for ibrutinib in 2024. It also shows what is available directly from the drug companies. Our findings complement those reported by Raymakers et al, who outlined factors that will likely be used to set the initial price offer for ibrutinib.8 Their outline reviewed factors such as therapeutic alternatives, the cost of ibrutinib as first-line treatment for CLL, and the costs of therapeutic alternatives for CLL. They ultimately suggest that using weighted averages of data for ibrutinib when used for CLL and for mantle cell lymphoma might facilitate an initial price offer. Data from the House Oversight Committee, reviewed herein, can then be used to adjust the initial ibrutinib starting point offer to the initial price offer that CMS can use in its negotiations with ibrutinib’s manufacturer.


Jason B. Gibbons, PhD, and Charles L. Bennett, MD, PhD, MPP, contributed equally to this work and are listed as co–first authors.

Author Affiliations: Department of Health Policy and Management, Johns Hopkins University Bloomberg School of Public Health (JBG, GFA); now with Department of Health Systems, Management & Policy, University of Colorado Anschutz Medical Campus (JBG), Aurora, CO; University of South Carolina College of Pharmacy (CLB), Columbia, SC; Beckman Research Institute of the City of Hope Comprehensive Cancer Center (CLB), Duarte, CA; Division of Hematology/Oncology, Department of Internal Medicine, Northwestern University Feinberg School of Medicine (KRC), Chicago, IL.

Source of Funding: Unrestricted grants from Arnold Ventures and the National Cancer Institute.

Author Disclosures: Dr Gibbons reports receiving unrestricted grants from Arnold Ventures. The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (JBG, CLB, GFA); acquisition of data (CLB); analysis and interpretation of data (CLB, KRC, GFA); drafting of the manuscript (JBG, CLB, KRC, GFA); critical revision of the manuscript for important intellectual content (JBG, CLB, KRC, GFA);provision of patients or study materials (CLB); obtaining funding (JBG, GFA); and supervision (GFA).

Address Correspondence to: Jason B. Gibbons, PhD, Department of Health Policy and Management, Johns Hopkins University Bloomberg School of Public Health, 615 N Wolfe St, Baltimore, MD 21205. Email: jgibbo13@jhu.edu.


1. Inflation Reduction Act of 2022, HR 5376, 117th Cong (2022). Accessed October 21, 2022. https://www.congress.gov/bill/117th-congress/house-bill/5376/text

2. Cubanski J, Neuman T, Freed M. Explaining the prescription drug provisions in the Inflation Reduction Act. KFF. January 24, 2023. Accessed October 21, 2022. https://www.kff.org/medicare/issue-brief/explaining-the-prescription-drug-provisions-in-the-inflation-reduction-act/

3. Drug Pricing Investigation: Majority Staff Report. Committee on Oversight and Reform, US House of Representatives; December 2021. Accessed October 21, 2022. https://bit.ly/3TqXx3C

4. A View From Congress: Role of Pharmacy Benefit Managers in Pharmaceutical Markets. Committee on Oversight and Reform, US House of Representatives; December 2021. Accessed October 21, 2022. https://bit.ly/3TBnWvT

5. Drug Pricing Investigation: AbbVie—Humira and Imbruvica. Staff Report, Committee on Oversight and Reform, US House of Representatives; May 2021. Accessed April 8, 2023. https://bit.ly/3Ite4Of

6. Gibbons JB, Laber M, Bennett CL. Humira: the first $20 billion drug. Am J Manag Care. 2023;29(2):78-80. doi:10.37765/ajmc.2023.89315

7. Medicare drug price negotiation: drugs selected for the first cycle of negotiation. CMS. October 17, 2023. Accessed November 6, 2023. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation

8. Raymakers AJN, Kesselheim AS, Rome BN. Medicare price negotiation: the example of ibrutinib. Health Affairs Forefront. May 2, 2023. Accessed May 2, 2023. https://www.healthaffairs.org/content/forefront/medicare-price-negotiation-under-inflation-reduction-act-example-ibrutinib

9. Patent certifications and suitability petitions: paragraph IV patent certifications. FDA. Updated February 27, 2024. Accessed April 27, 2023. https://www.fda.gov/drugs/abbreviated-new-drug-application-anda/paragraph-iv-drug-product-applications-generic-drug-patent-challenge-notifications

10. Brown JR, Eichhorst B, Hillmen P, et al. Zanubrutinib or ibrutinib in relapsed or refractory chronic lymphocytic leukemia. N Engl J Med. 2023;388(4):319-332. doi:10.1056/NEJMoa2211582

11. Byrd JC, Hillmen P, Ghia P, et al. Acalabrutinib versus ibrutinib in previously treated chronic lymphocytic leukemia: results of the first randomized phase III trial. J Clin Oncol. 2021;39(31):3441-3452. doi:10.1200/JCO.21.01210

12. NCCN. Clinical Practice Guidelines in Oncology. Waldenström macroglobulinemia/lymphoplasmacytic lymphoma, version 2.2022. Accessed April 27, 2023. https://www.nccn.org/professionals/physician_gls/pdf/waldenstroms.pdf

13. U.S. FDA approves Jaypirca (pirtobrutinib), the first and only non-covalent (reversible) BTK inhibitor, for adult patients with relapsed or refractory mantle cell lymphoma after at least two lines of systemic therapy, including a BTK inhibitor. News release. Eli Lilly and Company. January 27, 2023. Accessed April 27, 2023. https://www.prnewswire.com/news-releases/us-fda-approves-jaypirca-pirtobrutinib-the-first-and-only-non-covalent-reversible-btk-inhibitor-for-adult-patients-with-relapsed-or-refractory-mantle-cell-lymphoma-after-at-least-two-lines-of-systemic-therapy-including-a-301732669.html

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