Healthcare M&A and IRA Price Negotiations: Key Trends to Watch Amidst Political Shifts
IRA Price Negotiations:
The Inflation Reduction Act (IRA) of 2022 allows the Secretary of Health & Human Services (HHS) to negotiate prices of high-cost drugs covered by Medicare.
The first round of negotiations resulted in discounts ranging from 38% to 79% off list prices for 10 selected drugs, with projected savings of $6 billion for Medicare and $1.5 billion in out-of-pocket costs for beneficiaries in 202614.
Mergers and Acquisitions Trends:
The M&A market has seen a resurgence in 2024, driven by factors such as the Fed’s interest rate cut, increasing demand for private investments, and the emphasis on generative AI and digital transformation25.
Healthcare M&A has been active, with significant deals like Johnson & Johnson's acquisition of Shockwave Medical for $17 billion and Diamondback Energy's merger with Endeavor Energy Partners for $26 billion5.
Political Implications:
The 2024 elections could impact M&A and healthcare policies, with potential changes to the IRA and its provisions, including energy credits and healthcare tax credits3.
The political landscape may influence dealmaking, with certain sectors like healthcare and energy being particularly sensitive to policy changes35.
Future Projections:
The drug price negotiation process will continue, with additional drugs being negotiated in future years, including 15 drugs in 2027 and 20 drugs each year thereafter14.
The M&A market is expected to remain active, with a focus on strategic deals that enhance tech capabilities, digitalization, and sustainability initiatives25.
Sources:
1. https://medicareadvocacy.org/medicare-announces-results-of-first-round-of-historic-drug-price-negotiations-effective-2026/
2. https://www.alpha-sense.com/blog/trends/mergers-and-acquisitions-trends-outlook/
3. https://www.ey.com/en_us/insights/tax/2024-elections-and-tcja-tax-cliff-analyzing-3-major-implication
4. https://www.mintz.com/insights-center/viewpoints/2146/2024-08-20-cms-2026-ira-price-negotiations-results-likely-create