As long as the price setting provisions of the Inflation Reduction Act (IRA) remain in place, patients and innovation are stuck in the crosshairs. The administration has a responsibility on behalf of patients across the country to mitigate these harms and address the unintended consequences of the law.
In response to CMS’s draft guidance for the second year of price setting under the IRA, PhRMA outlined five key concerns.
- The price setting process is arbitrary and highly susceptible to politicization. The IRA gives CMS nearly unconstrained authority to both determine the price and impose severe penalties on manufacturers who do not agree to that price — the opposite of a true negotiation. The Secretary of Health and Human Services, a political appointee, specifically has broad decision-making authority to set the final price, leaving a significant threat that either a current or future Secretary could make predominantly political decisions regarding prices of selected medicines.
- Patient access to medicines in Medicare Part D is at risk. The substantial changes the IRA makes to Part D — including but not limited to government price setting — are likely to intensify insurers’ use of utilization management and coverage exclusions due to the pressures created by the law. As a result, access to medicines selected for price setting, as well as their non-selected competitors in the same therapeutic class, is likely to be significantly disrupted. CMS should make use of the full extent of its authority to ensure patient access is not disrupted.
- The competitive marketplace, which has history of driving down costs and helping patients access medicines, is undermined. The U.S. health care system is designed to promote incentives for continued innovation and patient access, using competition to help control costs. Brand medicines face robust competition from generic drugs, biosimilars and other brand medicines. However, the IRA allows the government to impose such low prices on an innovative brand medicine that biosimilar and generic manufacturers may not be able to compete, discouraging them from bringing products to market in the first place — eliminating the very competition that has controlled costs in the marketplace and kept medicine spending to just 14% of overall health care spending.
- Government price setting will do irreparable harm to innovation, hurting patients and leading to uncertainty for new treatments and cures. The IRA shifts existing R&D incentives and jeopardizes the future development of medicines in certain therapeutic areas with very real consequences for patients. The arbitrary timeline for when medicines can be selected for price setting is forcing biopharmaceutical companies to make difficult decisions about whether it is feasible to invest in some R&D projects. Post-approval innovation, small molecule development, orphan drug development and R&D for chronic disease treatments are discouraged due to the price setting program, including because CMS is using an extremely broad definition of a medicine subject to price setting.
- The views of patients and clinicians are notably absent from CMS’s approach. In setting the prices of selected medicines, it is unclear whether CMS is centering on the perspectives of patients, clinicians and caregivers — in generating or weighing evidence, in interpreting the factors, or in the methodology itself. In fact, the process to solicit feedback from patients, clinicians and caregivers has been riddled with fundamental substantive, as well as operational, issues. A failure to emphasize the needs of patients could lead to significant consequences to patient access to medicines and the ongoing development of future treatments.
PhRMA provided similar feedback last year, as did many patient, provider and other stakeholder groups. Unfortunately, CMS largely ignored that feedback. As we enter into year two of price setting guidance, CMS must course correct before it is too late.
Nicole Longo
Nicole Longo is Deputy Vice President of public affairs at PhRMA focusing on Medicare, 340B, importation and more. She previously worked for a D.C.-based public affairs firm where she assisted a wide range of clients with communications efforts on everything from trade policy to agriculture policy to health care policy. Outside the office, Nicole can be found trying new restaurants (usually Italian), taking an occasional barre class and cheering on the Cincinnati Bengals.
Nicole Longo
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"PhRMA reiterates concerns with IRA price setting program, urges CMS to mitigate harm"
Government Price Setting
Medicare
PhRMA reiterates concerns with IRA price setting program, urges CMS to mitigate harm
"PhRMA reiterates concerns with IRA price setting program, urges CMS to mitigate harm"