No Slowdown in Sight When It Comes to Focus on Drug Pricing Policy
- Recent drug pricing developments underscore that the focus on drug pricing issues is likely to continue regardless of the outcome of the upcoming November elections.
- CMS recently released final guidance on the Medicare Drug Price Negotiation Program and issued a Request for Information on a proposed Medicare $2 Drug List Model for comment.
- CBO released an analysis of drug pricing policy proposals, affirming that while potential budgetary impacts of such proposals may have changed post-IRA, the implications for research and development of new drugs for patients very much remains a consideration.
- CBO has also analyzed the potential federal budgetary impact of authorizing Medicare to cover anti-obesity medications and an issue that continues to percolate in Congress.
- Stakeholders will watch for additional developments as the Lame Duck session unfolds and the policy discussion is further shaped in the months ahead with a new administration and new Congress.
Congress may be in recess, but that has not slowed down drug pricing policy developments. In recent days, the Centers for Medicare & Medicaid Services (CMS) and the Congressional Budget Office (CBO) have rolled out a series of announcements in the form of guidance, a proposed new model and new analysis on policy proposals that will further inform drug pricing policy discussions. These developments also underscore that the focus on drug pricing issues is likely to continue regardless of the outcome of the upcoming November elections. This alert highlights recent developments and how they are further shaping drug pricing policy.
CMS Finalizes Drug Price Negotiation Program Guidance
Implementation of the Inflation Reduction Act’s (IRA) drug pricing provisions has been a priority for the Biden-Harris administration, as noted in prior analysis. Earlier this month, CMS released final guidance on the process for the second cycle of negotiations under the Medicare Drug Price Negotiation Program (Program). While CMS has set prices for the first cohort of drugs for calendar year 2026 under the Program, this latest guidance further informs the process changes CMS plans to take as the agency prepares to set prices for additional drugs covered by Part D for the second cycle of negotiations next year. Notably, CMS announced that it will hold up to 15 patient-focused roundtable events, and a town hall meeting, to solicit feedback on the clinical considerations related to the selected drugs. In announcing the final guidance, CMS highlighted that the agency plans to engage with a Medicare Transaction Facilitator for supporting the exchange of data and ensuring that eligible individuals with Medicare, and their pharmacies, have access to the maximum fair prices set for the drugs under the Program. CMS also highlighted that the final guidance includes multiple opportunities for engagement with participating drug companies, including the potential for additional written offers and counteroffers during the negotiation process. While release of this final guidance is the latest drug pricing development in the implementation of IRA, it will certainly not be the last: the next administration will also have to navigate implementation and it remains to be seen who and how they will approach it.
CMS Requests Feedback on Proposed $2 Generic Drug Program
The Biden-Harris administration is showing no signs of slowing down on its drug pricing policy work as it sprints to the end of President Biden’s time in office. On the heels of the release of the Drug Price Negotiation Program Guidance and in furtherance of President Biden’s Executive Order “Lowering Prescription Drug Costs for Americans,” CMS recently released a Request for Information on a proposed Medicare $2 Drug List Model developed by the Center for Medicare and Medicaid Innovation. Under the proposed model, individuals enrolled in a participating Medicare prescription drug coverage (Part D) plan would have access to certain drugs for a fixed copayment of no more than $2 for a month’s supply per drug. The announcement also included a sample list of prescription drugs that the agency preliminarily intends to include and noted that the generic drugs under consideration for the model would not be subject to utilization management requirements, except for safety-related requirements, at any network pharmacies. CMS also stated that participation in the model would be voluntary for Part D sponsors and envisions the model could start as early as January 2027. While CMS is seeking comment on the proposed model by December 9, 2024, what happens next with this proposed model will be determined by the next administration.
CBO releases analysis further fueling focus on drug pricing, Medicare coverage of Anti-Obesity Medications
Earlier this month, CBO released analysis on drug pricing policy proposals that have been discussed for many years. The policy approaches included setting maximum allowable prices based on prices outside of the United States, expanding IRA’s Medicare Drug Price Negotiation Program, requiring drug manufacturers to pay inflation rebates in the commercial market, importation, eliminating or limiting direct-to-consumer prescription drug advertising, earlier market entry for generic and biosimilar drugs, and increasing transparency in brand-name drug prices. This policy analysis underscores the ongoing focus by policymakers on drug pricing issues even in the wake of enactment and implementation of IRA’s drug pricing provisions. The analysis also affirms that while the baseline for potential budgetary impacts has changed in a post-IRA drug pricing policy environment, the implications for how various policies would alter the research and development paradigm to result in fewer new drugs reaching patients very much remains a consideration to weigh in considering various policy changes.
Separately, CBO also recently released new analysis on how authorizing Medicare to cover anti-obesity medications (AOMs) would impact the federal budget. As discussed in our prior analysis, the issue of Medicare coverage of anti-obesity medications has been a key policy area of focus for policymakers. A notable takeaway from this latest analysis is that the budgetary effects of authorizing AOMs in Medicare are highly uncertain. While this issue gained traction earlier this year with the House Ways and Means Committee moving the Treat and Reduce Obesity Act (H.R. 4818), neither the House Energy and Commerce Committee, nor the Senate Finance Committee, have yet to consider the bill or related legislation, likely positioning the legislative work on this issue to carry over into the next Congress.
Looking ahead to Lame Duck and beyond
The issue of drug pricing has received bipartisan attention in Congress and has also been an area of focus for both the Trump-Vance and Harris-Walz campaigns. As discussed in our prior analysis, the 118thCongress has seen an unprecedented level of Congressional activity focused on pharmacy benefit managers, including potential legislative reforms, and this issue is poised for potential action when members return to Congress for the Lame Duck session. While it is not yet clear what Congress will ultimately tackle before the end of the year, it is clear that the bipartisan focus on drug pricing policy is likely to continue in the next administration and 119thCongress even if the details of such focus remain to be seen and stakeholders will continue to closely watch for drug pricing policy developments in the weeks and months ahead.
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