CMS Releases Updated Guidance for Medicare Drug Price Negotiation Program in Response to Lawsuits

The Biden administration released revised guidance for the Medicare drug price negotiation program late last week in response to the mounting lawsuits against the policy required by the Inflation Reduction Act (IRA) of 2022.

Drugmakers Merck and Bristol Myers Squibb, as well as industry representatives like the U.S. Chamber of Commerce and the pharmaceutical trade group PhRMA have filed lawsuits against the Biden administration alleging violations of the First, Fifth and Eighth Amendments of the U.S. Constitution. According to the the Hill, the updated guidance from the Centers for Medicare and Medicaid Services (CMS) seeks to rectify some of the First Amendment claims by offering rigorous transparency.

However, the plaintiffs were unmoved by CMS’s response, Inside Health Policy explains. PhRMA responded by suggesting that the agency didn’t incorporate feedback from the industry and once again raised concerns that drug price negotiations would actively harm pharmaceutical research and development.

The approach CMS took in this final guidance confirms what we claimed in our lawsuit — Congress’ unconstitutional shortcuts taken in the law have given the administration far too much flexibility to set prices at their whim without any oversight or accountability to anyone. The final guidance demonstrates the administration is more focused on scoring political points than minimizing harm to patients, providers and future R&D.

Additionally, CMS announced that it would only consider active designations for potential orphan drug exclusions and will take cost-effectiveness measures as permitted in the initial negotiations, Fierce Healthcare reports. CMS will publish the first 10 drugs under negotiation by September 1, 2023 and negotiated prices will go into effect in 2026.

The revised guidance fact sheet can be found at CMS.