The Toll at the Gate

One toll, paid in public

Neurocrine Biosciences, a San Diego drugmaker, gave investors an unusually clear view of the trade. Its best-selling drug, Ingrezza, had $2.5 billion in net sales in 2025. During that year Neurocrine cut the drug’s price. On a call about the third quarter of 2025, its finance chief said price was down 6% to 7% from a year earlier. In context, he was very likely describing Ingrezza.

The company’s year-end release explained the cut with a revealing phrase: “a lower net price due to new formulary access investments.” In plain words, Neurocrine lowered its price so that insurers would cover the drug.

By the company’s account, the cut bought a lot. About 70% of Medicare lives now have coverage for Ingrezza, Chief Executive Kyle Gano said in July. Barron’s reports that the figure was less than half in 2024. Neurocrine has since raised its 2026 forecast for the drug to a midpoint of $2.85 billion, about 13% growth.

Investors were not impressed. The shares were down about 11% in afternoon trading on Feb. 12, the day Neurocrine first published its 2026 forecast. After second-quarter results showed pricing pressure, they slid from a late-July record near $185 to $145, Barron’s reported.

So was the toll worth paying? Here is a simple test. If coverage rose from about 45% to 70% of eligible patients, that is 56% more people who can get the drug easily. A 6.5% price cut, the middle of the reported range, pays for itself if only 13% of those newly covered patients, about one in eight, actually start taking it Theoria estimate. The exact starting point matters. Anywhere from 40% to 49% coverage, the threshold runs from about one in 11 to one in six. If every newly covered patient started the drug, Neurocrine could have cut its price by up to 36% before it lost money on the deal. One caution: the 6–7% figure is one quarter’s reported price change, and Neurocrine does not disclose Ingrezza’s full discount.

Why the gate got stricter

The toll got bigger because of a change most people missed in the 2022 Inflation Reduction Act. In 2024, once a Medicare patient’s drug costs passed the catastrophic threshold, Medicare paid 80% of the cost and the patient’s plan paid 20%. From 2025, the plan pays 60%, for brand-name and generic drugs alike.

That tripled the plan’s share of the costliest part of an expensive drug’s bill. Plans now have a much stronger reason to favor drugs with lower net prices. Adam Fein of the Drug Channels Institute writes that plans have begun to shift formularies in exactly that direction.

The plans have very likely started to use that leverage. Milliman, an actuarial firm, found that coverage for drugs from one group of smaller drugmakers fell from 74% of standalone-plan members in 2024 to 56% in 2025. And Medicare’s own negotiations show where the toll is heading next. From 2027, Medicare will pay $4,093 a month for Austedo, Ingrezza’s main rival. That is 38% below its 2024 list price. Milliman expects competitors of negotiated drugs may need bigger rebates to keep their coverage, so Ingrezza will likely face a new price to beat.

The case for the gatekeepers

The strongest objection is simple: this is the system doing what Congress wanted. Plans bargain harder and prices fall. Patients inside the gate, and taxpayers, are better off. That is likely true for many of them.

The evidence also deserves caution. A Health Affairs study found that standalone Medicare drug plans narrowed parts of their 2025 formularies but did not measurably increase prior authorization, the approval step a patient must clear before a plan pays. And a company’s reported price cut can understate the full discount it pays in rebates.

But bargaining is not the problem. Bargaining that nobody can see is. The patients waiting outside the gate do not show up in price data. In an American Medical Association survey of 1,000 physicians, 95% said prior authorization delays care and 79% said patients abandon treatment because of it.

What to do

Investors should treat “access investments” as admission fees, not as weakness. They should ask drugmakers to report the price change and the coverage change together, so the toll can be judged against what it buys.

Medicare should make the toll booth visible. Its 2024 prior-authorization rule makes Medicare Advantage, Medicaid and some other plans publish approval data each year, starting by March 31, 2026, but it leaves out prescription drugs. The Centers for Medicare & Medicaid Services should extend the rule to Part D. Plans would then publish how often they require approval for costly drugs, how often they say no and how long patients wait.

The gate now decides who gets a drug, and, in Medicare, much of what it costs. A toll of 6% to 7% for coverage that rose from under half to about 70% of Medicare lives is likely a good deal for the drugmaker. Nobody is yet counting what the wait costs the patient left outside.