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Pink Sheet – Medicare Price Negotiation: Data Needed To Establish ‘Unintended Consequences’ – CMS’ Blum

Pink Sheet – Medicare Price Negotiation: Data Needed To Establish ‘Unintended Consequences’ – CMS’ Blum

Stakeholders should join the US Centers for Medicare and Medicaid Services in tracking the impact of the Medicare price negotiation program on drug innovation and access in order to inform any program changes that Congress may consider down the road, said Jonathan Blum, CMS principal deputy administrator and chief operating officer.

Blum spoke about the price negotiation program and other aspects of the Inflation Reduction Act during the 12 February Biopharma Congress, which was co-produced by Prevision Policy and the Friends of Cancer Research.

Addressing industry concerns that the program will seriously undermine innovation, particularly for drugs approved under NDAs, Blum said: “Right now, our view is, taking everything together [in the Inflation Reduction Act], the Part D changes, the drug negotiation elements, the Part B/Part D drug rebates, we think on balance beneficiaries will have greater access to the drugs they need with this law in place.”

However, “one of the things that we’ve been asking stakeholders … is what are the data points that CMS should track, that [the Medicare Payment Advisory Commission] should track, that we should [all] really track to make sure that Congress got it right?” he said.

“We collectively have better data resources than ever before. So let’s build that dashboard today so we can really understand better [not only] the intended consequences but also the unintended consequences,” Blum continued. “Let’s set that up now. Let’s track it. Let’s watch it.”

One aspect of the new law that has drawn strong criticism from industry and investors is the requirement that small molecule drugs be subject to negotiated prices nine years after they are approved. Critics believe small molecule/NDA’d drugs should be allowed 13 years before they are subject to price controls, which is the way the new law treats biologics.  (Also see “Medicare Price Negotiation: Special Treatment For ‘Novel Technologies’ On PhRMA’s Advocacy Agenda” – Pink Sheet, 8 Feb, 2023.)

Blum said “the history of this kind of major change, whether it’s the Affordable Care Act or whether it’s [the launch of] Part D, whether it’s changes to the Medicare/Medicaid programs, that Congress comes back” and eventually makes adjustments. “So I think the responsibility we have, that we all collectively have, is to ensure that whenever there are changes that are being considered, that we have good data, that we really know what the right questions are today so in four, five, 10, 15 years’ time, when Congress does come back to take a second look, it can access [information on] whether Congress got it right or that there are things that we need to be concerned about.”

For CMS, “getting it right means that at the end of the day, we still have innovation, we still have choice, we still have competition, we have lower prices, we have better access and we have healthier beneficiaries,” Blum emphasized.

CMS Will Continue To Rely On Guidance To Implement Negotiation Program

CMS will continue to implement the initial framework for the price negotiation program through guidance, as opposed to notice-and-comment rulemaking, because of time constraints, he said. Under the law, CMS must implement the first round of negotiated prices in 2026, after publishing the list of 10 drugs that will be subject to negotiation in September 2023.

“Due to the timelines that are there are tremendously tight for us … Congress did waive the normal [rulemaking] process that CMS uses to put policies in place. So for the next several years, we will be following more the guidance process for us to put the law in place,” Blum explained.

However, “there are many areas that CMS will need feedback comment on. So we’re going to do this hybrid model” in which the agency will also solicit stakeholder feedback regarding various issues because the agency is “going to respect the fact that many of the best answers don’t just come from CMS but they come from having input,” he added.

CMS described that approach in a January notice about its forthcoming timeline for implementing the first round of price negotiations.  (Also see “Medicare Price Negotiation: Sponsors Will Have A Say, But Likely Not Sway As Timetable Comes Into Focus” – Pink Sheet, 11 Jan, 2023.) The agency also requested comments on a several issues related to the implementation of Medicare price inflation rebates in guidance released more recently.  (Also see “Medicare Drug Price Inflation Rebate Invoice Distribution Will Start In 2025, CMS Says” – Pink Sheet, 9 Feb, 2023.)

A plan for codification of the guidance will come “in the next several years,” Blum added. “But I think it is generally the process that even when CMS does use guidance, we do codify changes over time through more traditional means.”–CMS-Blum