First Drugs Subject to Inflation Reduction Act Price Provisions

The Centers for Medicare & Medicaid Services (CMS) announced recently the prices that they have set for the first 10 medications as an outcome of the Inflation Reduction Act’s drug provisions.

For the first time, the law provides Medicare the ability to directly “negotiate” (in effect, set, as otherwise significant penalties are imposed) the prices of certain high expenditure, single source drugs without generic or biosimilar competition.

These prices will go into effect by 2026 for patients enrolled in Medicare prescription drug coverage, with an estimated $1.5 billion in overall savings expected under the standard benefit design.

The Biotechnology Innovation Organization (BIO), of which MichBio is a state affiliate of, issued a statement regarding CMS’ announcement. Despite CMS claims regarding savings, the impact of negotiated prices on patients at the pharmacy counter is currently unclear. CMS did not disclose what evidence was used when setting prices, what stakeholders it sought input from, or  whether it has plan to protect patient access and out-of-pocket spending. The concern is that price setting could potentially impact investment decisions in new medicines and prices charged by private payers.

MichBio, along with its national partners, BIO and PhRMA will continue to advocate for the adoption of efforts to mitigate some of the most fundamentally damaging provisions of the Inflation Reduction Act, including the EPIC Act and ORPHAN Cures Act, to ensure that the IRA legislation does not further diminish the development of sorely needed drug treatments.