USA —The Centers for Medicare & Medicaid Services (CMS) has taken a decisive step forward in implementing the Inflation Reduction Act by releasing revised guidance that clarifies its approach to negotiating lower drug prices with pharmaceutical companies.
The legislation, which enables Medicare to directly negotiate with drugmakers to reduce the cost of certain high-priced Part B and Part D medicines, has already sparked multiple lawsuits within the industry.
Despite facing legal challenges from companies like Merck & Co., Bristol Myers Squibb, PhRMA, and the Chamber of Commerce, Health and Human Services Secretary Xavier Becerra remains resolute.
Secretary Becerra emphasized that pharmaceutical companies have reaped substantial profits for years, and their resistance to the administration’s efforts to secure better drug prices for families will not deter CMS.
In March, CMS unveiled draft guidance outlining the program’s workings and sought feedback from various stakeholders, including drug manufacturers, pharmacies, and pharmacy benefit managers.
The agency intends to adhere to its timeline, announcing the first 10 drugs selected for negotiation by September 1.
Negotiations between CMS and drugmakers are scheduled to take place from 2023 to 2024, with the new prices becoming effective in 2026.
The latest revisions in the guidance shed light on how CMS plans to negotiate and establish a maximum fair price (MFP) for the selected drugs in collaboration with participating manufacturers.
Manufacturers of the chosen medicines must sign agreements with CMS by October 1 to enter into a negotiation period for the MFP.
They are also required to submit data to Medicare, including information on research costs, production and distribution expenses, and any federal government financial support received during the drug’s development.
The confidentiality process has undergone changes, with CMS now allowing the release of specific information about the negotiations once the drug’s MFP is determined.
Companies are also permitted to publicly discuss the negotiations, addressing a major point of contention in the initial guidance that led to legal challenges from drugmakers.
CMS has clarified that a drug with orphan designations for multiple rare diseases will not qualify for the orphan drug exclusion, even if it hasn’t been approved for any indications related to the additional rare disease or condition.
In a move to foster greater engagement, CMS will host “patient-focused listening sessions” that provide drug companies and the public with more opportunities to interact with the agency.
These sessions, scheduled for the fall and focusing on the first round of drugs, will allow patients, caregivers, and others to provide input on how medications address unmet needs, their impact on specific populations, and the availability of therapeutic alternatives.
Lawsuits mount against Medicare’s drug price negotiation program
Several prominent players in the pharmaceutical industry, including Merck, Bristol Myers Squibb, PhRMA, and the US Chamber of Commerce, have filed lawsuits in federal courts challenging the constitutionality of Medicare’s drug price negotiation program.
The lawsuits raise concerns about innovation, patients’ access to new drugs, and the violation of constitutional amendments.
One argument is that the program infringes on the Fifth Amendment’s “takings” clause by allowing Medicare to acquire manufacturers’ patented drugs without fair compensation.
The negotiations process is also alleged to violate the First Amendment by pressuring manufacturers into accepting government-dictated prices as fair.
Additionally, opponents claim that the program violates the Eighth Amendment by imposing excessive fines on drugmakers who refuse to negotiate.
Merck and Bristol Myers Squibb anticipate that their drugs, including Januvia, Keytruda, Janumet, Eliquis, and Opdivo, will be subject to negotiation in the program.
Despite revisions in the guidance, the pharmaceutical industry remains dissatisfied, citing limited transparency and inadequate consideration of patient perspectives, potentially leading to reduced drug access for Medicare beneficiaries.
In response, CMS Administrator Chiquita Brooks-LaSure has affirmed that the Biden administration will vigorously defend the drug price negotiation program, emphasizing its commitment to affordability and accessibility in healthcare.
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