The post Could The Trump Administration Change The Medicare Drug Price Negotiation Program? appeared first on Above the Law.
In his first month as president, Donald Trump and his administration have gleefully dismantled many of former President Joe Biden’s initiatives. However, there has been one notable exception: the Medicare Drug Price Negotiation Program — although they’re leaving room for some potential changes.
The program, created under the Inflation Reduction Act (IRA), allows the federal government to negotiate the prices of some of the costliest Medicare Part D drugs directly with drug companies. The first 10 drugs selected for negotiation were announced in August 2023, and the negotiated prices will take effect in 2026. An additional 15 drugs were added in January in the final days of the Biden administration, and these negotiated prices will go into effect in 2027.
In a statement released last week, the Centers for Medicare and Medicaid Services said that lowering the cost of prescription drugs is a top priority for the Trump administration. CMS added that the agency “is committed to incorporating lessons learned to date from the program and to considering opportunities to bring greater transparency in the Negotiation Program.” It plans to seek input from stakeholders on ways to improve the program.
This statement, however, has some Democratic senators worried. In a letter sent to RFK Jr. last week, 13 senators argued that the “Trump Administration’s statement is far from an embrace of drug price negotiation and appears to be opening the door to changes that could undermine Medicare’s ability to get the best price possible on drugs.”
So what legally could the new administration change?
“By means of the rulemaking process and in how it interprets the IRA, CMS could potentially make significant changes to the negotiation program requirements — in other words, the structure of the negotiation program could be materially impacted, for example, by rulemaking that changes the process timeline or number of meetings between the parties, without Congressional approval,” said Matthew I. Kupferberg, a partner in Frier Levitt’s Life Sciences Group. This means that CMS could accelerate the negotiation process, reduce the opportunity for manufacturers to respond to CMS offers or make other changes.
The IRA has also been challenged in court.Numerous drugmakers have filed lawsuits against the negotiation program, including Novo Nordisk, Bristol Myers Squibb and AstraZeneca. Currently, nine of these lawsuits are ongoing, according to KFF.
If the Department of Justice ends up dropping opposition to the lawsuits, the judge could decide the matter without opposition, the parties could work out an agreement to revise the regulations or they could ask the court to send the case back to CMS to make changes, Kupferberg said. If the IRA is invalidated, this gives the Trump administration an opportunity to come up with their own drug reform.
“The administration could take a much harder stance, demanding a deeper discount, or take a completely different approach by saying, ‘No, link the price of drugs up to a basket of averages around the world,’ international reference pricing,” he said. “They could do that, or they could come back, for example, and do rebate reform.” International reference pricing is a method used to set the price of a drug in one country by comparing it to the prices of the same or similar drugs in other countries.
As for the drugs already selected for negotiation, that list is unlikely to change because the drugs are selected based on specific criteria in the IRA (including time on the market and having no generic or biosimilar alternative), according to Kupferberg. The prices already negotiated also likely won’t change as that would “meet fierce resistance” and the IRA does not allow for such retroactive changes within the statute.
Although the new administration may make changes to the program, “actual repeal of the law, which had broad bipartisan support, is politically risky, and may not succeed,” Kupferberg noted.
Ultimately, however, it’s very difficult to predict for sure how the Trump administration will move forward with the Medicare Drug Price Negotiation Program, according to Tricia Neuman, senior vice president of KFF and executive director of its Program on Medicare Policy.
“His pick for HHS Secretary [RFK Jr.] has said he intends to implement the law, but that leaves open the question about whether the Administration will defend the program in the various lawsuits filed by the pharmaceutical industry,” she said. “It also leaves open the question about whether and how the Trump administration will take action on drug prices. The Administration could double down on the program to help Medicare beneficiaries get a better deal on drug prices, or respond to industry concerns by weakening some of the provisions, or take an entirely different tack.”
Neuman noted that Trump has been open to other reforms addressing drug prices, including tackling the practices of pharmacy benefit managers, which are not part of the negotiation program. However, how the administration will approach this remains unclear.
What do healthcare advocates want?
Patient advocacy organization Patients for Affordable Drugs was cautiously optimistic about CMS’ announcement last week.
“The statement could have said, ‘We’re going to no longer negotiate.’ If you look at the actions of the administration, it’s not afraid to take aggressive action if it chooses to,” said David Mitchell, founder and president of the organization. “In this case, it said they’re going to continue with negotiation and with a goal of achieving greater value for beneficiaries and taxpayers while continuing to foster innovation. Those are the goals of our organization. So we see this as potentially positive. Now, the devil’s in the details, because they also referenced in the statement incorporating lessons learned to date. Whose lessons?”
Patients for Affordable Drugs was strongly in favor of the Biden administration’s efforts in the Medicare Drug Price Negotiation Program. Mitchell said that he thinks the current program is strong and that he wouldn’t change anything. That said, if the new administration conducts a negotiation that’s “on par or better” than what the Biden administration achieved with the first 10 drugs, then that’s a win for Patients for Affordable Drugs.
Although the organizationdoesn’t see a need for change within the negotiation program, the National Community Pharmacists Association (NCPA) does. NCPA represents over 18,900 pharmacies in the U.S. CEO B. Douglas Hoey said the association isn’t opposed to the intention of the program, but said the way it’s implemented will put significant financial strain on community pharmacists.
NCPA released a report last week showing that pharmacies will experience prescription payment settlement delays of at least seven additional days for negotiated drugs because of the program. Regulations for the program state that the manufacturer must send the refund for the prescription within 14 days of receiving eligibility confirmation for the patient, rather than ensuring the pharmacy gets the reimbursement within 14 days of dispensing the prescription. Each pharmacy could lose nearly $11,000 in weekly cash flow due to delayed payments. Because of these challenges, a recent survey from NCPA revealed that 93.2% of independent pharmacies are considering or have already decided not to stock at least one of the first 10 drugs included in the program.
“Our members are saying, ‘We just won’t be able to carry the drug,’ which of course, thwarts the intended purpose of trying to get these drugs at a lower price to seniors,” Hoey said. “If the pharmacies are going to go out of business by carrying them, it’s a major, unintended consequence.”
To alleviate these challenges, the association is calling for several changes to the program, including ensuring there is no delay in payments for pharmacies.
The Council for Affordable Health Coverage, an advocacy organization focused on reducing healthcare costs, would like to see a more drastic change: a repeal of the IRA. The IRA is failing, declared Joel White, president of the organization.
“We support repealing the IRA and its price controls — enacting a real out-of-pocket cap on drug costs for seniors that doesn’t raise premiums or limit drug coverage, and pledge to not use Medicare to pay for other priorities like green energy tax credits,” he said in an email. “Congress should immediately end the pill penalty, which imposes price controls on drugs sooner than biologics. This misguided policy is shifting new drug development into more expensive biologics, which increases patient out-of-pocket costs and makes it harder to get their treatment.”
However, the chances of a repeal actually happening are extremely unlikely, according to Frier Levitt’s Kupferberg.
“At this point, the Administration has only indicated that it intends to stay the course with the drug negotiation process, subject to a rather vague commitment to render the process more transparent and inclusive. … The only thing I think is certain is that there will be no repeal attempt in the near future, and drug cost reduction will remain in play,” he said.
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