As is well-known, pharma companies’ recent campaign against drug-pricing reforms didn’t end well for the industry.
Their attack on the Democrats’ bill fell short over the summer, culminating in provisions that are being rolled out now as part of the Inflation Reduction Act.
With the previously unthinkable — pricing negotiation — fast becoming reality, pharma’s overall strategy had seemed to pivot away from opposing the law and more toward shaping it. However, as indicated last week by Pharmaceutical Research and Manufacturers of America (PhRMA), the sector’s influential trade group, its lobbyists are considering going on the offensive again, this time with a legal challenge.
“It’s one option we are considering to ensure patients have access to the medicines they need and our companies can continue to innovate new, lifesaving medicines,” Sarah Ryan, a public affairs associate for PhRMA told MM+M.
If the big trade group does mount a lawsuit, it’s likely to pounce on a number of areas of the proposed negotiation, spelled out in a 76-page document filed with regulators last week. The letter follows industry’s previously voiced concerns about the law’s unintended R&D consequences, which drugmakers have been talking about in earnings calls and investor presentations over the seven months since the IRA’s passage.
Those consequences include the skewing of incentives away from investing in small-molecule drugs and more toward pricier biologics. Nullifying the IRA’s nine-year price-negotiation countdown for small-molecule drugs, as opposed to 13 years for biologics, was said to top the list of incoming priorities for PhRMA board chair and Novartis CEO Vas Narasimhan.
As last week’s letter shows, the new law’s effect on innovation isn’t the only thing that irks companies. For one, PhRMA asserts that the Centers for Medicare and Medicaid Services (CMS) is rushing its guidance out the door.
Last month, CMS issued a 91-page memo detailing how it proposes to implement drug-pricing negotiations, but the agency allows only 30 days for stakeholders to comment. PhRMA said the standard 60-day comment period was required, especially considering CMS’ own acknowledgement of the program’s complexity.
In a briefing with reporters last week, the trade group further charged CMS with making the process a “regulatory black box.”
Rather than traditional notice and comment, the agency is making the process “arbitrary” and “politicized,” PhRMA suggested, including on an already finalized section delineating which drugs would be included in the negotiations. To wit: its recent move quietly paring back the list of drugs requiring rebates.
“It is a grave error for CMS to adopt the approach outlined in that section without giving stakeholders an opportunity to comment,” manufacturers and PhRMA argued.
The trade group even goes so far as to contend that certain provisions of the guidance, namely those involving use of data, would violate the First Amendment if finalized as proposed. Manufacturers would be restrained from using or disclosing information from CMS’ offers, including ceiling price and any data exchanged verbally during the negotiation period.
In what was described to the press as a “gag clause,” audio or video recording of oral conversations between CMS and drugmakers would be barred. Additionally, companies would need to certify that any information exchanged with the government has been destroyed, a requirement which PhRMA labeled “patently unconstitutional.”
There’s also a prohibition on using price-setting data for any purpose other than Medicare’s negotiation program. This is vague, argued PhRMA, adding that vague laws “inherently invite subjective enforcement” and could “chill legitimate speech.”
PhRMA also takes issue with CMS’ methodology for setting “maximum fair prices,” contending that this process is neither consistent, objective nor predictable.
CMS, through a spokesperson, told MM+M it’s committed to collaborating and engaging with the public in the policy-making and implementation process for the Medicare drug-price negotiation program. The agency says it’s reviewing all comments received and intends to communicate its rationale for revisions in a revised guidance set to be published this summer.
CMS is due to publish its list of the first 10 drugs selected for the drug price negotiation program by September 1. Until then, companies are pushing for the agency to move more cautiously and in a way that builds public confidence.
This story has been updated with a response from CMS.
