Reuters recently reported that some of the largest pharmaceutical companies are planning to fight the United States plan to negotiate drug prices for Medicare. Among the potential reasons for litigation include an argument that the ban against speaking about the negotiation talks is a violation of constitutional rights.
Background
Under the Inflation Reduction Act (IRA), the Centers for Medicare and Medicaid Services (CMS) is to identify the ten most costly drugs for Medicare Part D beneficiaries no later than September 1, 2023. Companies that manufacture those ten drugs would then have until October 1, 2023, to sign agreements to participate in the negotiation process and until October 2, 2023, to submit manufacturer-specific data to CMS to consider in the negotiation of maximum fair price. Negotiations would take place through 2024 and the new prices would go into effect in 2026.
As alluded to above, included in the guidance from Medicare is a rule that prohibits drug makers from talking about the negotiations, imposing fines of $1 million per day for any violations.
The Reuters Report
Reuters notes that Eliquis (Bristol Myers Squibb and Pfizer), Ibrance (Pfizer), and Imbruvica (AbbVie) are likely to be among the ten drugs selected for negotiations. Reuters further notes that it has seen responses to CMS from five of the top pharmaceutical manufacturers that raise legal concerns about the law and the roadmap to implementation. However, those letters have not yet been made public by either the pharmaceutical companies or CMS. CMS has indicated it will publish the letters in July once the guidance and regulations for implementing the law have been finalized, as it may make changes to policies before then.
Six sources told Reuters that factors involving whether a drug is considered eligible for these negotiations may “contradict and unlawfully extend the law’s provisions,” including the definition of a single-source drug that sets the bar too high on whether a drug is considered to have competition.
While the Biden Administration and supporters of the legislation believe that Medicare price negotiation could result in tens of billions of dollars in savings, the pharmaceutical industry says that it will ultimately result in a loss of income to them, which will in turn reduce their ability to produce “groundbreaking new treatments.”
Will Litigation Be Successful?
As we previously noted, there is language in the IRA that would prohibit any administrative or judicial review of how Medicare determines which drugs are eligible for negotiation and the ultimate determination of maximum fair price. Even still, if a lawsuit is filed (albeit unsuccessfully), it may still be successful in delaying the implementation of negotiations and “stalling until better political winds blow in another direction.”
Former CMS Acting Administrator Andy Slavitt said, “The question isn’t whether there’s going to be litigation, the question is whether or not what you’re doing is complying with the law and is defensible. And I think [CMS] is taking very careful, thoughtful efforts to do that.”