According to a Centers for Medicare and Medicaid Services (CMS) statement, under the Biden executive order known as the “Inflation Reduction Act”, CMS has created the Medicare Drug Negotiation Program (MDNP), where Medicare will for the first time be able to directly negotiate with drug providers over the cost of certain drugs. Ten single source, high expenditure Medicare Part D drugs will be selected for the first year of the MDNP, with the final prices taking effect on January 1st, 2026. Every year, more drugs, including Medicare Part B drugs, will be added. According to the same statement, the program was created to increase affordability and access to prescription drugs for individuals with Medicare, and to drive market competition.

TRANSPARENCY IN THE PROGRAM

With consideration to confidentiality, CMS has made efforts to make the MDNP process as transparent as possible. CMS has detailed the criteria for identifying drugs selected for the program in its Initial Guidance, and shared its intent to publish the list of the up to 10 selected Medicare Part D drugs and their negotiated maximum fair prices. CMS has also provided a timeline that provides a thorough outline of the negotiation process in a publicly available memorandum.

According to the Initial Guidance, which was published on March 15, 2023, and subsequently confirmed, such negotiations will begin with the publication of the list of selected drugs on September 1st, 2023. Drug companies responsible for the manufacturing and development of the drugs must comply with the negotiation process or be subject to daily Civil Monetary Penalties (CMPs).

CMS’ Revised Guidance, published on June 30, 2023 added that it will share “additional non-proprietary information that was part of the negotiation process,” in addition to the timeline mentioned above, which it refers to as “a narrative explanation” of the process. The primary manufacturer of a selected drug may also publicly disclose information regarding any aspect of the negotiation process at its discretion; however, doing so will result in CMS reserving the right to “publicly discuss the specifics of the negotiation process regarding that Primary Manufacturer.” Under the first iteration of the Guidance, drug companies would have been bound to confidentiality as to the negotiations. CMS has made public the comment letters it received as to their MDNP Initial Guidance.

LEGAL CHALLENGES

In June, Merc & Co, Inc., Bristol-Myers Squibb, and others issued separate lawsuits against the federal government, alleging among other things, that CMS’ efforts at negotiation and the program to reach agreements with pharmaceutical companies was a ‘façade’ that interfered with their First Amendment rights, by compelling speech and forcing them to become ‘mouthpieces’ for the government. The companies also raised additional issues not related to transparency or First Amendment rights, such as the Takings Clause under the Fifth Amendment. The cases are still in their early stages.

Categories: DATA TRANSPARENCY, Uncategorized