Business

Lego saw revenue during the first six months of 2023 rise 1%, reaching 27.4 billion Danish krone, or about $4 billion.
Meanwhile, its publicly traded counterparts such as Mattel, Hasbro, Funko and Jakks Pacific have all reported double-digit revenue and sales declines so far this year.
Lego has built on pandemic-era growth, boosted by a diverse slate of products that cater to kids and adults alike, and continues to outperform the industry.

Lego Star Wars toys sit on display inside a Toys R Us store in Paramus, New Jersey, Nov. 26, 2019.
Bloomberg | Getty Images

While other toy companies struggle with an inflation-fueled sales slump, Lego is building positive results brick by brick.
The privately held Danish toymaker saw revenue rise 1% during the first six months of this year, reaching 27.4 billion Danish krone, or about $4 billion.

Meanwhile, publicly traded rivals such as Mattel, Hasbro, Funko and Jakks Pacific have all reported double-digit revenue and sales declines so far this year.
“I think what makes me very satisfied is this fact that we continue to outgrow the industry,” CEO Niels Christiansen told CNBC. “The good thing for us is that every year over the last four or five years, we’ve been outgrowing the market by 10 percentage points … that means we’ve been taking market share consistently and that has continued, that’s super important.”
Toy companies across the industry saw massive gains during the Covid-19 pandemic, as parents looked for ways to keep their kids occupied during lockdowns. Adults, too, returned to the toy aisle to stave off boredom.
Lego built on pandemic-era growth, boosted by a diverse slate of products that cater to kids and adults alike, while outperforming the industry and zapping up market share.
Of course, the company has not been immune to macroeconomic pressures, particularly higher costs for material, shipping and energy.

Net profit for the first half of the year reached 5.1 billion Danish krone, or about $742 million, down 17% from the same period in 2022.
Raw material costs were a major expense for the company during the first half of the year, but Christiansen said he expects that to lessen going forward as prices come down.
Lego has offset some of the higher shipping costs by placing manufacturing plants near key markets. For example, the U.S. gets its Lego products from a factory in Mexico. That supply chain will shorten in the next two years as the company opens a new plant in Virginia.
Additionally, Christiansen said strong demand for Lego’s eclectic selection of building sets has helped narrow the gap. Consumer sales grew 3% during the first half of the year.
Christiansen pointed to the strength of Lego’s brand and its diverse product line that hits on a variety of “passion points” for its strong performance so far in 2023. These products range from themed sets of Star Wars to buildable muscle cars and cityscapes.
The company is growing its portfolio to around 750 products this year. About 48% of that portfolio will be new, Christiansen said. That’s on par with previous years and is part of the company’s strategy for having fresh and relevant sets for all consumers.
The company also has been reaping the benefits of opening stores in new markets, particularly in China. So far in 2023, the company opened 89 shops worldwide, with 54 of those in China. The region is newly exposed to the iconic building bricks and physical locations have helped show adults and children how to play with Lego.
“We believe we will end the year at a single-digit growth rate,” Christiansen said. “I believe we can continue to outpace the market.” More

Two blood thinners and a diabetes medication are the most widely used by Medicare enrollees among a list of 10 drugs that will be subject to price negotiations between manufacturers and Medicare. 
Bristol-Myers Squibb’s blood thinner Eliquis was the most used among Medicare enrollees, with 3.7 million beneficiaries using it.
The Biden administration unveiled the much-awaited list, officially kicking off a process that aims to control rising drug costs in the U.S.

Bottles of the drug Jardiance, made by Eli Lilly and Company, sit on a counter at a pharmacy in Provo, Utah, January 9, 2020.
George Frey | Reuters

Two blood thinners and a diabetes medication are the drugs most widely used by Medicare beneficiaries among a list of 10 drugs that will be subject to price negotiations between manufacturers and Medicare. 
The Biden administration unveiled the much-awaited list Tuesday, kicking off a process that aims to lower drug costs for older adults in the U.S. The list names drugs with the highest spending for Medicare Part D, which covers prescription medications, for the period from June 1, 2022, to May 31, 2023.

Bristol-Myers Squibb’s blood thinner Eliquis was the most widely used during that time period, with 3.7 million Medicare enrollees using it, according to a fact sheet from the Centers for Medicare and Medicaid Services, or CMS. 
Eliquis, co-developed by Pfizer, is used to prevent blood clotting and reduce the risk of stroke.
The second most used drug was Boehringer Ingelheim’s Jardiance, which lowers blood sugar for people with Type 2 diabetes. Nearly 1.6 million Medicare enrollees used Jardiance during the same time period, according to the fact sheet. 
Johnson & Johnson’s blood thinner Xarelto was third, as about 1.3 million beneficiaries used the medication during that time.

Medicare Part D also spent more on those three drugs during the time period than it did on the seven other medicines on the list. The plan spent $16.5 billion on Eliquis, roughly $7 billion on Jardiance and $6 billion on Xarelto, according to CMS.

In total, the 10 medicines accounted for $50.5 billion, or about 20%, of total Part D prescription drug costs from June 2022 to May 2023, CMS said.
Around 50.5 million patients are currently enrolled in Part D plans, according to health policy research organization KFF. More than 8.2 million use the 10 drugs on the list. 
Drugmakers have to sign agreements to join the negotiations by Oct. 1. CMS will then make an initial price offer to manufacturers in February 2024, and those companies have a month to accept or make a counteroffer. 
The negotiations will end in August 2024, with agreed-upon prices published on Sept. 1, 2024. The reduced prices won’t go into effect until January 2026.  More

Under Armour founder Kevin Plank had an unusual relationship with television anchor Stephanie Ruhle, according to court documents.
The relationship included private jet rides and access to confidential company information.
The revelations stem from a shareholder lawsuit.

Kevin Plank, now former CEO of Under Armour, during a CNBC interview on Mad Money on Feb. 28th, 2018.
Scott Mlyn | CNBC

Under Armour’s founder Kevin Plank forged an unusual relationship with television anchor Stephanie Ruhle that included trips on his private jet, access to confidential company information and a secret phone reserved just for their communications, court records show. 
The records, filed last week in connection with a shareholder lawsuit the athletic apparel company is facing in Maryland federal court, show that Ruhle, who was a Bloomberg reporter at the time, advised the company when it was facing negative coverage. Ruhle is now a nighttime anchor for MSNBC. Plank and Ruhle’s relationship previously came up in media coverage in 2019.

In January 2016, when Morgan Stanley published a research report that downgraded Under Armour’s stock and reduced its price target, Ruhle asked the apparel company’s executives for data that would contradict the report – and then advised they send it to media outlets like CNBC. 
“[T]his content is perfect just in case anyone decides to cover the Morgan [Stanley] thing – it combats any risk of negativity,” Ruhle wrote in the email, according to the filings.  
That afternoon, Ruhle questioned the Morgan Stanley report on Bloomberg’s air and referenced data points that Plank had gathered. 
A couple of weeks later, when Under Armour reported positive quarterly results, Plank emailed Ruhle “look at that stock!!!” and then helped her arrange an interview with basketball player and Under Armour athlete Stephen Curry the following day, records show. 
Plank, the current executive chairman of Under Armour, asked his former communications executive, Diane Pelkey, who now works for Chewy, to help set up the interview with Curry.

Plank later told her in an email that the Curry interview served as a “a great thank you” to Ruhle “for being the only member of media to get UA’s back when [Morgan Stanley] came out against us.”

‘We were friends’

The filings raise a host of ethical questions about both Plank and Ruhle and the boundary that reporters must keep between the powerful people that they cover. 
The two were both deposed earlier this year in connection with a shareholder lawsuit filed in 2017 that alleges Under Armour artificially inflated its share price and caused them to lose money. 
When asked during his deposition about the Morgan Stanley report, Plank said the two “had an understanding of trust.” 
“She didn’t trade in this, her family doesn’t trade in this. She’s simply giving me input,” Plank said, adding it was during the company’s quiet period.
He also referred to her as a “confidant” and “someone I get counsel from.”
“I would give her counsel on her career and she would give me counsel on things I was dealing with that were either banking or media or human nature in relation,” Plank said of their relationship.
Ruhle, for her part, admitted in the deposition that she flew on Plank’s private jet at least twice – once from Cannes, France, to New York and another time from New York to Baltimore. 
“We were friends,” said Ruhle. “And I covered his company.” 
When asked whether the flights on the jet were part of her work as a Bloomberg reporter or as a friend, Ruhle responded: “I was flying on his plane as myself, Stephanie Ruhle. I’m – I’m not really in a category one or the other.” 
A spokesperson for Under Armour said the filings have “no bearing” on the underlying shareholder lawsuit. 
“Plaintiffs and their counsel have obvious financial incentives to paint these documents in the most negative light. As we have stated, Mr. Plank has utilized confidential advice or counsel from a number of outside advisors from different fields of expertise, and that is what these documents show,” the spokesperson said. “Furthermore, none of the information was used improperly.”
As far as the shareholder lawsuit, the spokesperson said the claims are “meritless” and are “being defended vigorously.” 
MSNBC, which is not named in the lawsuit and didn’t employ Ruhle at the time, declined to comment on the matter. Ruhle and Bloomberg didn’t immediately respond for requests to comment.
Disclosure: CNBC and MSNBC are owned by NBCUniversal. More

As of Sunday, “Oppenheimer” has generated around $300 million at the domestic box office, the fifth-most this year, and topped $777 million globally, the fourth-highest, since its July 21 debut.
The film’s success comes at a time when major superhero movies and franchise sequels have underperformed.
“Oppenheimer” is Nolan’s third highest-grossing domestic release, behind Batman movies “The Dark Knight” and “The Dark Knight Rises.”

Valerie Macon | Afp | Getty Images

LOS ANGELES — Christopher Nolan’s films, from “The Dark Knight” to “Inception,” have been a force at the box office for a solid two decades.
But “Oppenheimer,” the director’s R-rated historical drama about the man who spearheaded the creation of the atomic bomb, has outpaced even the loftiest of expectations.

As of Sunday, the dizzying, dialogue-heavy three-hour epic has generated around $300 million at the domestic box office, the fifth-most this year, and topped $777 million globally, the fourth-highest, since its July 21 debut. And it continues to draw audiences.
In each consecutive weekend since its release, “Oppenheimer” has seen domestic ticket sales drop less than 45%. Typically, films will see box office receipts shrink by between 50% and 70%. In its most recent weekend, receipts shrunk just 23%.
And that’s without ever being the number one film at the domestic box office. Warner Bros.’ record-breaking “Barbie,” which opened the same weekend as “Oppenheimer,” has held the top spot for five out the of the last six weeks. “Barbie” is the highest-grossing domestic release of the year, and is looking to eclipse Universal’s “Super Mario Bros. Movie” as the top-grossing global film in 2023.
Universal is banking on the longevity of “Oppenheimer” at the box office, as it does not plan to make the movie available on streaming until February, which falls in what’s usually the thick of Oscar campaign season. The film itself, Nolan, and stars Cillian Murphy and Robert Downey Jr. are considered early favorites for next year’s Academy Awards.
Already, “Oppenheimer” was facing limited direct competition at the box office heading into the fall, but the ongoing dual labor strikes in Hollywood have pushed several films to dates later in the year or off the calendar completely.

Last week, Warner Bros. and Legendary Entertainment moved “Dune: Part Two,” which was slated for release in early November, to next year. The epic sci-fi film was expected to take the majority of premium format screens, but now, “Oppenheimer” can continue to hold several of those for weeks to come.
The film’s success also comes at a time when major superhero movies and franchise sequels have underperformed. Meanwhile, original storytelling has thrived, with Warner Bros.’ funky and metafictional “Barbie” and Angel Studio’s conservative-friendly “Sound of Freedom” dominating the box office.
Nolan himself has parlayed his success with Batman movies into the kind of big budget trust from studios to ambitious, twisty movies on a large scale, like “Dunkirk” and “Interstellar.”
“Oppenheimer” is Nolan’s third highest-grossing domestic release, behind 2008’s “The Dark Knight” and 2012’s “The Dark Knight Rises.” Globally, it’s his fourth-highest film, falling just shy of the $825 million “Inception” tallied in 2010. Both “The Dark Knight” and “The Dark Knight Rises” generated more than $1 billion at the global box office.

The Nolan touch

“Oppenheimer” director Christopher Nolan has called 70-millimeter IMAX film the “gold standard.”
Julien De Rosa | Afp | Getty Images

“I think it starts with the filmmaker,” said Jim Orr, president of domestic theatrical distribution for Universal Pictures. “We feel very privileged to be in business with Christopher Nolan. He crafted an extraordinarily compelling tale about one of the most significant events in human history.”
Nolan’s films have come to be event cinema. In several films, and particularly “Oppenheimer,” he has shied away from computer-generated images in favor of practical effects. His movies are also known for their thunderous soundscapes.
That’s why 37% of all tickets sold for “Oppenheimer” through Monday were for premium format screens like IMAX and Dolby, according to data from EntTelligence. Typically, these more expensive screens account for less than 15% of ticket sales for a film.
Notably, the average premium ticket price for “Oppenheimer” has been $16.90, while standard tickets for the film averaged at $11.68 a piece.
“IMAX has played a major role with audiences seeking out the biggest and best auditoriums, resulting in sellouts going into the sixth weekend of release,” said Shawn Robbins, chief analyst at BoxOffice.com. “Its box office performance in that format ranks among the best of all time, matched only by uber-franchise sequels like Avengers, Star Wars and Avatar.”
Nolan’s 70mm version of “Oppenheimer,” which has been a major driver of foot traffic to IMAX screens equipped to show it, has also broken records at one of Hollywood’s most legendary cinemas, the TCL Chinese Theatre. Within its first three weeks in theaters, “Oppenheimer” became the highest-grossing film release in the theater’s 97-year history.
It beat out 2015’s “Star Wars: The Force Awakens,” which made the record in 15 weeks. The influx in interest for “Oppenheimer” led that cinema to add 6 a.m. showings to satisfy demand.
Word of mouth has only benefitted the dialogue-heavy drama, with many non-target audiences heading to theaters to see it that typically wouldn’t have been drawn.
“The success of ‘Oppenheimer’ reflects a unique confluence of factors,” said Paul Dergarabedian, senior media analyst at Comscore. “The draw created by the reputation of one of the most well-respected movie directors, a perfectly executed marketing campaign, an inspired release date and an epic movie theater experience that elevated the film to event status.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal distributed “Oppenheimer.” More

3M is on the verge of ending the largest mass tort litigation in U.S. history, but it still faces other legal headaches.
The company is also awaiting approval for its $10.3 billion settlement over so-called forever chemicals.
To fund its settlements, 3M has cut costs, including through eliminating 8,500 jobs, or 10% of its workforce.

3M is on the verge of ending the largest mass tort litigation in U.S. history, but it’s still facing other expensive legal headaches.
The company said Tuesday that it settled with roughly 250,000 plaintiffs in a $6.01 billion deal. Military veterans and service members alleged 3M manufactured defective earplugs that resulted in hearing loss.

“I am confident that this more than $6 billion settlement will receive full and overwhelming support, not just because it holds 3M accountable, but more importantly, because it provides just and deserved compensation to our veterans,” Bryan Aylstock, the court-appointed lead plaintiffs’ counsel, told to CNBC over email.
While news of the settlement relieves one big legal overhang, 3M is still awaiting approval of its $10.3 billion settlement with water utilities over drinking water contaminated with substances known as “forever chemicals.”
That settlement, which is facing pushback from more than 20 states, only covers a subset of liabilities and does not include a growing list of states that have sued 3M. Nor does it include personal injury claims.
Capstone estimates 3M’s total PFAS liability risk is nearly $30 billion, beyond the existing settlements.

3M has also faced lawsuits from countries such as the Netherlands and Belgium over PFAS contamination. Europe continues to weigh a decision on whether to ban PFAS chemicals altogether. In the U.S., the Environmental Protection Agency is considering labeling PFAS a hazardous chemical. Experts say that could lead to more testing and a better understanding of just how pervasive the toxic chemical is.

To fund its settlements, 3M has cut costs, including through eliminating 8,500 jobs, or 10% of its workforce, this year.
The industrial giant is also planning to spin off its high-performing health-care business by the end of 2023 or early 2024. JPMorgan analyst Stephen Tusa expects that transaction to bring in $7 billion to $9 billion in cash flows for 3M.
Much debate has been centered around 3M’s dividend, which pays investors 6.1%. JPMorgan, UBS and RBC are among the Wall Street firms that have mentioned 3M’s dividend is at risk. “Our expectation is that 3M will lower the dividend following the spin-out of the Healthcare unit,” UBS analysts wrote in a note to clients Monday.
The timeline for the business transaction seems to be on track, with 3M announcing last week that Zimmer Biomet CEO Bryan Hanson will be joining the company as CEO of its health-care business.

3M company global headquarters. in Maplewood, Minnesota.
Michael Siluk | Universal Images Group | Getty Images

In that same announcement, it was revealed that current Chief Financial Officer Monish Patolawala added president to his title. In a note to clients, RBC analyst Deane Dray said “this arguably positions him as the heir-apparent to CEO Mike Roman.”
Roman has been leading 3M for five years. That includes the Covid pandemic, during which a shortage of the company’s N95 respirators quickly became a global crisis. He’s also had to oversee the company through the earplugs and PFAS litigation, plus pushback from a top shareholder on the underperformance in the stock.
Shares of 3M have fallen 48% since he was appointed CEO in 2018. During that same timeframe, the XLI Industrials ETF has rallied 50%.
The stock rose more than 1% on Tuesday. More

“America is the piggy-bank of the pharma world,” gripes David Mitchell of Patients for Affordable Drugs, a consumer lobbying group. There is some truth to this. America is the world’s largest pharmaceutical market, with $630bn in sales in 2022, or 42% of the worldwide total. Its contribution to profits—65% of the global haul—is greater still. American patients have long borne the burden of these juicy returns. Prescription medicines in America cost two to three times more on average than in other wealthy countries (see chart). Patients’ out-of-pocket expenses, the slice of drug costs not covered by insurance, are also among the highest in the world.One reason for high prices is that, unlike other countries, America has not regulated drug prices. Until recently it was illegal for Medicare, the government-funded health insurance for over-65s, to haggle with drug companies. That is set to change. The Inflation Reduction Act (IRA), passed last August, gives Medicare the power to negotiate directly with pharmaceutical firms. It also forces companies to pay a rebate to Medicare if their drug prices rise faster than inflation. The Congressional Budget Office, a federal agency, estimates that price-capping measures will lop $96bn from the federal deficit by 2031.On August 29th the government named the first ten drugs chosen for price negotiation, which will take effect in 2026. Pharma firms have little choice but to agree to the price set by officials. Any that walk away will have to choose between paying stringent fines, or withdrawing all of their drugs from the Medicare programme. The backlash from the pharma industry has been fierce. “This is not ‘negotiation.’ It is tantamount to extortion,” protested Merck, an American drugmaker, in a lawsuit against the government. A slew of pharma giants—Astellas, Boehringer Ingelheim, Bristol Myers Squibb and Johnson & Johnson—have joined the legal bandwagon, challenging price-setting provisions in the IRA. Pharma bosses are bracing for price cuts of between 25% and 95% in drugs chosen for price negotiation. Since the law’s passage over 50 companies have blamed the IRA in earnings calls for clouding their prospects. It is already having some unwanted side-effects. One issue is a provision in the law that could change the types of drugs that these companies develop. Most medicines are either small-molecule drugs or large-molecule drugs. The former are chemical-based pills of the kind that line medicine cabinets. Large-molecule drugs, also called biologics, are more complex and must be injected into the bloodstream. The ira grants biologics 13 years of pricing freedom after a drug is approved, whereas small-molecule drugs get only nine years post-approval before they face Medicare’s bean counters. Jonathan Kfoury of LEK, a consultancy, estimates that small-molecule brands could lose between 25% and 40% in overall revenue due to early price caps. Executives fret that the new rules will dissuade innovation in small-molecule pills. Last November Eli Lilly, a big American drugmaker, binned a small-molecule cancer drug from its pipeline, blaming the ira for making the investment unviable. In the same month Alkermes, an Irish biotech firm, announced plans to spin off its biologics-focused oncology business into an independent company. Richard Pops, the company’s chief executive, explained that the IRA had “made biologic medicines more valuable”.Another contentious provision in the law starts the pricing clock at a drug’s launch. Pharma firms usually introduce a new drug to small patient populations, like those with rare conditions or late-stage diseases, who have few alternatives, before widening availability to others. With only nine years in which to maximise returns, companies will try to “delay the clock” by launching their drug for the largest disease areas, believes David Fredrickson, who leads the oncology division of AstraZeneca, an Anglo-Swedish pharma giant. Genentech, an American biotech firm owned by Roche, a Swiss drugmaker, is considering postponing the launch of its upcoming small-molecule drug for ovarian cancer. Instead, the company may wait a few years until the drug has been cleared for use in the much larger prostate cancer market. The impact of the IRA may be muted, at least until the end of this decade: JPMorgan Chase, a bank, suggests that the new law’s price cuts will be only a “modest drag” on big pharma’s growth in its first few years. But as more medicines are added, drugmakers will feel more pain. And if the new rules dissuade pharma firms from developing small-molecule drugs, they could prove counterproductive, by raising prices in the long term. Unlike biologics, which are harder to copy, small-molecule pills are flooded with cheaper knockoffs once their patent expires.Alexis Borisy, a biotech investor, notes that uncertainty around the returns for small-molecule medicines is already influencing funding decisions. That is a problem. Big pharma relies on smaller, more agile biotech firms for ideas. Between 2015 and 2021, 65% of the 138 new drugs launched by big pharma originated in external partnerships, mostly with smaller firms. Given America’s disproportionate role in the discovery of new therapies, disruptions to the innovation pipeline could have far-reaching consequences.■ More

Eminem has demanded GOP presidential hopeful Vivek Ramaswamy stop using his music on the campaign trail.
Ramaswamy rapped Eminem’s hit 2002 song “Lose Yourself” at a campaign stop during the Iowa State Fair earlier this month.
There’s a long history of artists telling presidential candidates to stop using their music on the campaign trail.

Inductee Eminem performs on stage during the 37th Annual Rock & Roll Hall of Fame Induction Ceremony at Microsoft Theater in Los Angeles, Nov. 5, 2022.
Jeff Kravitz | Filmmagic, Inc | Getty Images

Rapper Eminem has demanded Vivek Ramaswamy stop using his music on the campaign trail — and the Republican presidential candidate looks ready to let the issue go.
In a cease-and-desist order sent to Ramaswamy’s lawyer on Aug. 23, music publisher BMI said Eminem took issue with the use of his music during Ramaswamy’s campaign events. It came more than a week after Ramaswamy, a tech entrepreneur and political newcomer, delivered an impromptu performance of Eminem’s hit 2002 song “Lose Yourself” at a campaign stop during the Iowa State Fair.

“BMI has received a communication from Marshall B. Mathers, III, professionally known as Eminem, objecting to the Vivek Ramaswamy campaign’s use of Eminem’s musical compositions,” the publisher wrote in letter obtained by NBC News and first reported by the Daily Mail.
“BMI will consider any performance of the Eminem Works by the Vivek 2024 campaign from this date forward to be a material breach of the Agreement for which BMI reserves all rights and remedies with respect thereto,” the letter said.
In response, the Ramaswamy campaign signaled the GOP hopeful will not perform the song again.
“Vivek just got on the stage and cut loose. To the American people’s chagrin, we will have to leave the rapping to the real slim shady,” a spokesperson for the Ramaswamy campaign told NBC News.
Many politicians have been sent similar cease-and-desist orders in past election cycles over their campaign song choices. Former president and 2024 Republican front-runner Donald Trump has received dozens of orders from popular artists including the Rolling Stones, Queen, Adele and Pharrell Williams. More

The Biden administration unveiled the first 10 prescription drugs that will be subject to price negotiations between manufacturers and Medicare.
The announcement kicks off a controversial process under the Inflation Reduction Act that aims to make costly medications more affordable for older Americans. 
The list includes Bristol-Myers Squibb’s blood thinner Eliquis, Johnson & Johnson’s own blood thinner, Novo Nordisk insulin products and Merck’s diabetes drug Januvia.

A pharmacist holds a bottle of the drug Eliquis, made by Pfizer Pharmaceuticals, at a pharmacy in Provo, Utah, January 9, 2020.
George Frey | Reuters

The Biden administration on Tuesday unveiled the first 10 prescription drugs that will be subject to price negotiations between manufacturers and Medicare, kicking off a controversial process that aims to make costly medications more affordable for older Americans. 
President Joe Biden’s Inflation Reduction Act, which passed in a party-line vote last year, gave Medicare the power to directly hash out drug prices with manufacturers for the first time in the federal program’s nearly 60-year history. The agreed-upon prices for the first round of drugs are scheduled to go into effect in 2026. 

Here are the 10 drugs subject to the initial talks this year: 

Eliquis, made by Bristol-Myers Squibb, is used to prevent blood clotting to reduce the risk of stroke.
Jardiance, made by Boehringer Ingelheim, is used to lower blood sugar for people with type 2 diabetes. 
Xarelto, made by Johnson & Johnson, is used to prevent blood clotting to reduce the risk of stroke.
Januvia, made by Merck, is used to lower blood sugar for people with type 2 diabetes.
Farxiga, made by AstraZeneca, is used to treat type 2 diabetes.
Entresto, made by Novartis, is used to treat certain types of heart failure.
Enbrel, made by Amgen, is used to treat rheumatoid arthritis. 
Imbruvica, made by AbbVie, is used to treat different types of blood cancers. 
Stelara, made by Janssen, is used to treat Crohn’s disease.
Fiasp and NovoLog, insulins made by Novo Nordisk.

The Medicare negotiations are the centerpiece of the Biden administration’s efforts to rein in the rising cost of medications in the U.S. Some Democrats in Congress and consumer advocates have long pushed for the change, as many seniors around the country struggle to afford care.
But the pharmaceutical industry views the process as a threat to its revenue growth, profits and drug innovation. Drugmakers like Merck and Johnson & Johnson and their supporters aim to derail the negotiations, filing at least eight lawsuits in recent months seeking to declare the policy unconstitutional.
The drugs listed Tuesday are among the top 50 with the highest spending for Medicare Part D, which covers prescription medications that seniors fill at retail pharmacies.
The 10 medicines accounted for $50.5 billion, or about 20%, of total Part D prescription drug costs from June 1, 2022, to May 31, 2023, according to the Centers for Medicare and Medicaid Services, or CMS. 

The drugs have been on the market for at least seven years without generic competitors, or 11 years in the case of biological products such as vaccines. 
In 2022 alone, 9 million seniors spent $3.4 billion out of pocket on the 10 drugs, a senior Biden administration official told reporters Tuesday during a call.
Medicare covers roughly 66 million people in the U.S., and 50.5 million patients are currently enrolled in Part D plans, according to health policy research organization KFF.

What happens next

Drugmakers have to sign agreements to join the negotiations by Oct. 1. CMS will then make an initial price offer to manufacturers in February 2024, and those companies have a month to accept or make a counteroffer. 
The negotiations will end in August 2024, with agreed-upon prices published on Sept. 1, 2024. The reduced prices won’t go into effect until January 2026. 
If a drugmaker declines to negotiate, it must either pay an excise tax of up to 95% of its medication’s U.S. sales or pull all of its products from the Medicare and Medicaid markets. 
The pharmaceutical industry contends that the penalty can be as high as 1,900% of a drug’s daily revenues. 
After the initial round of talks, CMS can negotiate prices for another 15 drugs for 2027 and an additional 15 in 2028. The number rises to 20 negotiated medications a year starting in 2029 and beyond.
“I think it’s incredibly important to keep in mind that the negotiation process is cumulative,” said Leigh Purvis, a prescription drug policy principal with AARP Public Policy Institute. “We could have as many as 60 drugs negotiated by 2029.”
CMS will only select Medicare Part D drugs for the medicines covered by the first two years of negotiations. It will add more specialized drugs covered by Medicare Part B, which are typically administered by doctors, in 2028. 
The drug price talks are expected to save Medicare an estimated $98.5 billion over a decade, according to the Congressional Budget Office. They’re also estimated to reduce the federal deficit by $237 billion over 10 years. 
The negotiations are also expected to save money for people enrolled in Medicare, who take an average of four to five prescription drugs a month and increasingly face out-of-pocket costs that many struggle to afford. 
Nearly 10% of Medicare enrollees ages 65 and older, and 20% of those under 65, report challenges in affording drugs, a senior administration official said Tuesday.

Drugmakers’ legal challenges

Merck, Johnson & Johnson, Bristol-Myers Squibb and Astellas Pharma are among the companies suing to halt the negotiation process. The industry’s biggest lobbying group, PhRMA, and the U.S. Chamber of Commerce have filed their own lawsuits. 
The suits make similar and overlapping claims that Medicare negotiations are unconstitutional. 
The companies argue that the talks would force drugmakers to sell their medicines at huge discounts, below market rates. They assert this violates the Fifth Amendment, which requires the government to pay reasonable compensation for private property taken for public use. 
The suits also argue that the process violates drugmakers’ free speech rights under the First Amendment, essentially forcing companies to agree that Medicare is negotiating a fair price.
They also contend that the talks violate the Eighth Amendment by levying an excessive fine if drugmakers refuse to engage in the process.
The suits are scattered in federal courts around the U.S. Legal experts say the pharmaceutical industry hopes to obtain conflicting rulings from federal appellate courts, which could fast-track the issue to the Supreme Court. 
Some drugmakers have confirmed their intention to bring their legal battle to the nation’s highest court. 
“As we look forward, we’re going to take this to the fullest, which means we’ll take it through District Court and, if need be, into Circuit Court and ultimately to the Supreme Court,” Merck CEO Robert Davis said during an earnings call earlier this month. “So, really that’s the strategy.”
Meanwhile, the Biden administration has vowed to fight the legal challenges.
Biden and his top health officials have embraced the lawsuits as evidence that they’re making progress in the fight to cut drug prices.
“Big Pharma doesn’t want this to happen, so they’re suing us to block us from negotiating lower prices so they can pad their profits,” the president said in a speech at the White House last month. “But we’re going to see this through. We’re going to keep standing up to Big Pharma.”

How much Medicare spends on the drugs

Medicare Part D spent the most among those drugs on Eliquis at $16.5 billion, according to a CMS fact sheet. 
The plan also spent roughly $7 billion on Jardiance, $6 billion on Xarelto, $4 billion on Januvia and $3.2 billion on Farxiga. Spending for Entresto, Enbrel, Imbruvica, Stelara and the two insulins came in at more than $2.5 billion each. 
In 2022, more than 3.5 million enrollees used Eliquis and paid $441 out of pocket on average for the blood thinner.
Roughly 1.3 million enrollees used Jardiance last year, paying $290 out of pocket on average. About 1.3 million beneficiaries also used Xarelto and paid $451 out-of-pocket on average. 
Far fewer enrollees used Imbruvica and Stelara last year, at 22,000 and 20,000, respectively. But enrollees paid the most out of pocket for those drugs: $5,247 for Imbruvica and $2,058 for Stelara on average. 
Meanwhile, 763,000 enrollees used Novo Nordisk’s two insulin products last year and paid $121 out of pocket on average. 
A handful of drugs on the list came as a surprise, including Farxiga and Stelara. Wall Street analysts and health policy researchers had been expecting other names, such as Eli Lilly’s diabetes drug Trulicity or Xtandi, a rheumatoid arthritis medication from Astellas Pharma. 
A senior administration official said the list likely diverged from predictions due to changes in Medicare Part D spending. 
“Data may now have fallen lower on the list because utilization may have dropped off in the last year or other drugs may have become more common,” the official said during the call. More