Experts, industry groups and patient advocates are closely watching the next steps in the Biden administration’s fledgling program to negotiate Medicare prices for high-cost drugs after all the selected drugmakers signed on to participate.
On Sept. 29, a Donald Trump-appointed judge in Ohio declined to halt the program. But the decision was preliminary, and the administration will have to survive at least nine lawsuits seeking to shut down the process. Experts are also watching for what information leaks from negotiations when they kick off early next year.
Many industry and legal experts are skeptical of the drugmakers’ legal claims. But Robin Feldman, a law professor with University of California College of the Law, San Francisco, said the battle’s ultimate fate is uncertain.
“These cases are written with the Supreme Court justices in mind,” she said. “Whether anything will tempt the justices to step in remains an open question.”
All nine manufacturers of the 10 selected treatments signed on to participate in the program by Monday’s deadline — even while seven of the drugmakers simultaneously sue the government over it. Novo Nordisk joined the legal fray on Sept. 29.
The selected drugs include Bristol-Myers Squibb Co.’s blood thinner Eliquis, which averages $608 in annual out-of-pocket costs and is used by 3.7 million patients. The list also includes Boehringer Ingelheim’s diabetes and heart failure medication Jardiance, which averages $490 in out-of-pocket costs for 1.6 million enrollees.
The Centers for Medicare and Medicaid Services is scheduled to hold listening sessions with patients, caregivers, consumer organizations and others from Oct. 30 to Nov. 15. The agency is expected to send its first offer to the companies Feb. 1, 2024, and finalize negotiations Aug. 1 of next year. Prices would be published Sept. 1, taking effect in 2026.
“Our goal is to ensure access to innovative treatments and therapies for people that need them when they need them,” CMS Administrator Chiquita Brooks-LaSure said in a statement Tuesday.
The big question mark is how low CMS will go. The law sketched parameters regarding the ceiling price that the agency will accept — but not the floor.
“What measuring stick they are going to use ultimately to set the price is unknown to me,” said Theo Merkel, a former Trump White House adviser and director of the Private Health Reform Initiative at the Paragon Institute.
While he also doesn’t support the typical rate-setting process that Medicare undertakes for other goods and services, Merkel argued that the negotiation program lacks the guardrails and predictability afforded through the usual Medicare pay scale.
“So to me, this is a price control that provides broader discretion to political appointees and bureaucrats at CMS,” he said.
But Juliette Cubanski, deputy director of Medicare at KFF, formerly the Kaiser Family Foundation, sees the program as potentially more industry-friendly since Medicare doesn’t engage in the same dialogue for hospital and physician care.
“The goal here is not to pay zero for these drugs,” she said. “The goal here is to arrive at a price that CMS and manufacturers agree is a more fair price, rather than Medicare basically just being a price taker.”
If they refused to negotiate, the companies would have to pull all of their products from Medicare — a financially disastrous prospect. They argue this is akin to coercion. But Judge Michael J. Newman of the Southern District of Ohio, a Trump nominee, cast serious doubt on that argument when he rejected the Chamber of Commerce’s request for an injunction last week.
“Because Plaintiffs are not legally compelled to participate in the Program — or in Medicare generally — they have not shown a strong likelihood of success on the merits of their due process claim,” he wrote on Sept. 29.
The cases span several circuits nationwide. Andrew Twinamatsiko, associate director of the Health Policy and the Law Initiative at the Georgetown University O’Neill Institute, said the industry “will be swimming against a really heavy tide going forward.”
“One judge’s decision is not necessarily binding on the other courts,” he said. “But I think they can take a cue.”
The arguments could reach the Supreme Court if the cases prompt split decisions. And more companies could bring new lawsuits if their drugs are selected in future years. Astellas Pharma Inc. voluntarily dropped its lawsuit last month once the company learned its cancer drug Xtandi was not picked for negotiation.
But Feldman said the current wave of cases pretty much exhaust the usual arguments.
“The nine suits that are out there already claim violation of more constitutional provisions than most people knew existed,” she said. “The Constitution is not a very long document. At some point they’re going to run out of provisions.”
Still, drugmakers could bring more cases challenging procedural or other factors based on their individual dealings with CMS, Twinamatsiko said.
“I think the potential will be shifting from constitutional challenges, more to drug-specific challenges,” he said.
In the meantime, analysts will watch for how much pricing information the companies make public throughout the process, especially because of how little is known about how drugmakers price their products. The agency rolled back initial restrictions that sought to keep drugmakers from discussing negotiations, but it’s unclear how much the companies will share.
“I think we’ll just have to wait and see what signals we get,” Cubanski said, “either from manufacturers of selected drugs who are participating or from CMS.”
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