Experts, Lawmakers Explore Downside of Drug-Price Negotiation

Potential unintended consequences of Medicare's drug-price negotiation program were examined during a panel discussion hosted by The Hill and sponsored by the Alliance for Aging Research, an industry-funded nonprofit.

Wednesday's panelists raised concerns that drug-price negotiation under the Inflation Reduction Act (IRA) could create access problems for vulnerable patients. Others worried that declining revenue for drug companies could lead to fewer breakthrough therapies.

Signed into law in 2022, the IRA capped insulin's cost at $35 per month for Medicare Part D beneficiaries and limited their annual spending to $2,000; the bill for the first time gave Medicare the ability to negotiate the price of certain costly prescription medications.

In late August, the Centers for Medicare & Medicaid Services (CMS) unveiled the first 10 drugs targeted by the program, with negotiated prices expected to take effect on Jan. 1, 2026.

Ultimately, the IRA as currently structured, has the potential to hurt rather than help patients, said Sue Peschin, president & CEO of the Alliance for Aging Research, based in Washington D.C.

Hampering Access for Patients of Color

With regard to utilization management, Peschin explained that one element of the IRA involves restructuring Medicare Part D so that insurers become responsible for 60% of drug costs in 2025, which is "quite a jump" from their current 15%. Because of this increased responsibility, Peschin argued it's "likely" insurers will leverage utilization management techniques such as prior authorization and step therapy to "ration" care.

Interventional cardiologist Sara Collins, MD, co-chair of the Health and Policy Committee for the Association of Black Cardiologists, voiced her concern that drug-price negotiation could inadvertently make it harder to access the selected drugs, particularly for African American and other minority patients.

Seven of the 10 drugs included on Medicare's price negotiation list are cardiometabolic drugs that treat patients at high risk of stroke, pulmonary embolism, and deep vein thrombosis. For example, on the list are blood thinners rivaroxaban (Xarelto) and apixaban (Eliquis), both regularly prescribed at Collins' office, she said. Similarly, sacubitril/valsartan (Entresto) is a key drug for heart failure that is to undergo price negotiation.

Notably, the selected cardiometabolic drugs were chosen not because of their list price but because of their high volume of use and their total cost to the Medicare program, Collins argued. That means the potential for harm if access is substantially restricted, and that any layering of utilization managment techniques such as prior authorization is going to "hit Black and Brown people harder," she said.

Black adults have the highest rates of stroke, heart failure, and hypertensive renal disease, and the highest premature cardiovascular mortality in the country, Collins said.

In addition, Hispanic, Black, and Native Americans are 40% to 50% more likely to receive a diabetes diagnosis than white Americans. Diabetes medications are also included in the list of selected drugs.

"Utilization management complicates our ability to prescribe these medications and puts our patients in a precarious position as a result," Collins said, adding that she hopes CMS will establish guardrails to prevent insurers from "rationing" healthcare for the most vulnerable patients by using tools like prior authorization.

Stifling Innovation?

Under the IRA, the Congressional Budget Office estimated that only one fewer innovative drug would reach the market over 10 to 15 years. "We'll see if that's actually true," said Kurt Schrader, a former Democratic representative from Oregon, and now of the law and lobbying firm Williams & Jensen.

Schrader was one of the speakers who voiced concern on Wednesday over whether CMS's drug-price negotiation was fair and whether it would hamper access to new drugs.

Craig Garthwaite, PhD, an economist and director of Healthcare for the Kellogg School of Management at Northwestern University in Evanston, Illinois, said CMS has been granted "an amazing amount of power" under the IRA.

It's inaccurate to call this a negotiation, he said, as CMS can essentially tell drug companies to accept the price it chooses or leave the Medicare Part D program.

"I guess you negotiate with a mugger when they show up. It's your money or your life," said Garthwaite. "Technically you've got two options there, but most of us don't think of it that way."

Drugs like sacubitril/valsartan are very effective at treating heart failure, but people with certain types of heart failure may not respond as well as others, Garthwaite said. "We know there are companies trying to invest in [alternatives]. Are they going to get rewarded, if they provide more therapeutic value over what's classified as a therapeutic substitute?"

Schrader was similarly skeptical about any actual "negotiation" happening under CMS's plan. He described the penalties for drug companies not cooperating with the drug-price negotiation program -- the excise tax or exclusion of any of a company's drug from the Medicare program -- as "outrageous."

Asked whether he thought Congress might be able to create a technical fix, Schrader said, "This is an issue that resonates with everybody, so I think there's an opportunity to do some bipartisan work."

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