The Centers for Medicare and Medicaid Services (CMS) announced updates to its guidance on pharmaceutical cost negotiations on Friday, increasing openness.

U.S. President Joe Biden speaks during an event to discuss Social Security and Medicare held at the University of Tampa on February 09, 2023, in Tampa, Florida. (Source: Yahoo! Finance)

Pharmaceutical Cost Setting New Guidelines

According to the report released by Yahoo! Finance, the pharmaceutical industry is under a lot of strain as it waits for formal discussions, to begin with CMS over the medication cost covered by Medicare as a result of the Inflation Reduction Act’s (IRA) negotiation authority. In addition, the industry is awaiting the list of the first medications that will be criticized for their exorbitant costs this fall.

The very few significant modifications to the final guidance show CMS treated this as a box-checking exercise rather than a chance to lessen the detrimental effects the price-setting policy will have on patients or the larger healthcare sector, according to a statement from the industry lobbying group PhRMA.

The US Department of Health and Human Services (HHS), which oversees CMS, has already been included in several lawsuits that claim the procedure is unlawful and that it was not intended to be voluntary or transparent. Chiquita Brooks-LaSure, CMS Administrator, said in response to a question from a reporter regarding the cases, “We feel that the law is on our side.”

According to Bill Sweeney, SVP of Government Affairs at AARP, the bill is unbreakable and the corporate community will use severe threats to try to stop it from going into force. He claims it is not at all surprising that drug companies have already brought legal action against the measure. The drug industry is driven to keep raising prices on prescription drugs for Americans and Medicare beneficiaries while attempting to sabotage our endeavor in every way they can.

According to Brooks-LaSure, they already received more than 7,000 thoughtful and helpful public comments on the initial guidance. They took into account every piece of feedback to make sure that the ground rules for the Medicare negotiations are focused on the people they are serving.

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Action to Reduce Pharmaceutical Cost

During a conference call with reporters, Dr. Meena Seshaman, director of Medicare, further highlighted that information sharing also includes information shared between manufacturers and that any information sharing should be done by laws prohibiting anti-competitive behavior. According to her, the goal is to carry out Congress’s intention, which was to reduce pharmaceutical costs, when it passed the bill. Several businesses are simultaneously losing their monopolies on popular medications, which will probably fuel more competition as generics and biosimilars hit the market. In contrast to Johnson & Johnson’s (JNJ) Stelara, which will lose its patent this autumn, AbbVie (ABBV) already faces biosimilar competition for its popular Humira drug after losing exclusivity on it this year.

According to Seshaman, the bargaining procedure is just for pharmaceuticals that do not face significant competition; if there is significant competition, those drugs would no longer be chosen.

The program doesn’t entail any “negotiation” at all. Instead, it places no substantial restrictions on HHS’s new ability to set pharmaceutical costs, forcing pharmaceutical makers to accept price caps at whatever level HHS determines, according to the complaint brought by PhRMA.

Although CMS seems to be battling for consumers, Leigh Purvis, head of AARP’s health care costs and access program, claimed on Friday on Yahoo Finance that CMS is afraid of the criticism it is receiving. Purvis believes that CMS is doing a fantastic job of attempting to include everyone at the table. He believes that the degree to which they observe criticism is a sign that they also hear it.

The first ten pharmaceuticals selected for cost-saving discounts are expected to be made public by CMS in September, according to the schedule.

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