Section 50 of the Inflation Reduction Act Drug Price Negotiation Program: Considerations for the Centers for Medicare Medicaid Services, Manufacturers, and the Health Economics and Outcomes Research Community [Editor's Choice]

Abstract

The Centers for Medicare & Medicaid Services (CMS) published initialand revisedguidance describing how the agency will implement the “Drug Price Negotiation Program” (DPNP) (quotation marks around the words “negotiate” and “negotiation” specify that these are terms used by the agency in their publications. Many manufacturers believe the process described by the agency does not provide a genuine opportunity to negotiate, and this is one factual allegation most common among lawsuits filed against the Department of Health and Human Services in response to the Inflation Reduction Act [IRA] implementation) provisions of IRA. Many are concerned about the lack of scientific clarity and rigor in the agency’s process as currently known, as well as the effects of implementation on patient access and the continued development of new treatments, especially in oncology and rare diseases. The agency’s actions and published justification thereof will profoundly affect the timing of new launches, availability of new indications, and role of evidence generation., Furthermore, some contend that the DPNP may not even be legal (at the time of writing, at least 8 IRA implementation lawsuits have been filed against the Department of Health and Human Services).

How CMS implements the IRA also has many important implications for health policy researchers and health economics and outcomes research (HEOR) scientists alike. There are significant challenges with specific provisions of the law and CMS’s implementation guidance that we fear will lead the agency to establish initial offers and maximum fair prices that do not reflect the clinical benefit and value of selected drugs. Indeed, neither the CMS guidance nor statements from agency officials explain whether the government’s goal is to lower drug prices, reduce patient out-of-pocket costs, or get more value for the government’s money. Furthermore, the methods CMS selects and the quality of the evidence it reviews matter, particularly because value assessment is a tool that comprised both science and judgment, not a rule that can be used simply to set prices.

Authors

John M. O’Brien Jan Elias Hansen

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