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Bloomberg Law – Drug Price Negotiations Need ‘Nimble’ Approach, Official Says

Bloomberg Law – Drug Price Negotiations Need ‘Nimble’ Approach, Official Says

The Medicare agency may eventually conduct rulemaking to standardize its new process for negotiating the prices of the highest spending drugs, a top official said Monday.

Jonathan Blum, principal deputy administrator and chief operating officer at the Centers for Medicare & Medicaid Services, said the timeline Congress set in the Inflation Reduction Act (Public Law 117-169) to begin negotiating certain drug prices are “tremendously tight” for the agency. This requires the agency to, at least now, plan out how it will implement this new authority by issuing guidance to industry, rather than going through the process of establishing binding, enforceable rules.

“We’re going to be nimble, meaning that we don’t necessarily go through the process of proposed rules, final rules,” Blum said at the Biopharma Congress meeting hosted by Prevision Policy and Friends of Cancer Research.

But he also noted, “It is generally the process that even when CMS does use guidance that we did codify changes over time,” adding, “how we think about permanent codification we’ll have to come to in the next several years.”

The CMS plans to release this spring initial guidance to industry on how it will work with manufacturers of the first 10 high-spending prescription drugs subject to government price negotiations. The agency has said the forthcoming guidance will outline the agency’s plans for the offer and counteroffer process between Medicare and prescription drug companies, and the methodology for applying maximum fair prices.

Short Turnaround Time

The IRA allows the CMS to implement the drug pricing provisions through guidance, but some industry members and drug pricing policy analysts have argued that notice and comment rulemaking would allow greater opportunity for input before the provisions go into effect.

“It doesn’t give a lot of turnaround time, which for me is presumptive then that the guidance will go into effect,” Nancy E. Taylor, shareholder at Greenberg Traurig, LLP, and a former Senate health policy staffer, said in a Jan. 25 webinar hosted by the Food and Drug Law Institute.

But industry and policy watchers have also acknowledged that the deadlines included in the law leave the agency limited; the CMS must publish on Sept. 1, 2023, the Medicare Part D drugs selected for negotiation starting in 2026.

“The past four or five months or so we have really done our best to engage to meet with stakeholders, providers, pharmaceutical companies to really understand what are the key pressure points,” Blum said on Monday. CMS has been holding monthly group calls with manufacturers on IRA implementation, though some industry members have said that fears of sharing proprietary information with competitors has prevented companies from sharing feedback with the CMS during these calls.

Blum said the CMS is “on track with every deliverable that Congress has set for us” in the IRA. The agency has been actively hiring additional staff to help implement the law’s drug pricing provisions, and Blum said he expects “for us to be fully staffed by this summer for that work.”

Push for Parity

As the CMS implements the law, the agency will need to examine any unintended consequences limiting pharmaceutical innovation, Blum said Monday.

Industry members have pushed for a potential change to offer cancer therapies and other medications longer protection from government price negotiations. Small molecule drugs—which have traditionally made up most of the market—are exempt from this process until nine years after their approval date. More complex biologics are exempt until 13 years after approval.

“If you’re limiting the exclusivity for small-molecule drugs,” then “you’re reducing the incentive to an investor,” Amy Chevalier Efantis, vice president and head of public policy and government affairs for pharmaceutical company GSK plc, said in a panel discussion Monday.

Blum said the CMS will be closely looking at data on drug price negotiations and other components of the IRA, “so that we can really understand what are the intended consequences but also the unintended consequences.” The IRA also allows the CMS to collect rebates from certain drug manufacturers who raise prices on products faster than the rate of inflation, and also includes several components to redesign Medicare’s drug benefit.

The agency will look at whether “Congress got it right,” and “if there is any need for modification or tweak,” Blum said.

To contact the reporter on this story: Celine Castronuovo at