Time is running out for major drugmakers to sign agreements with Medicare for pricing negotiations. Failure to do so by Sunday could result in heavy taxes and loss of eligibility to sell through Medicare.
Despite pending lawsuits and the absence of court injunctions, several companies involved in the production of the 10 selected drugs for Medicare negotiations seem prepared to proceed with the negotiation process.
Merck, whose Januvia diabetes treatment was selected, plans to sign an agreement with the Centers for Medicare & Medicaid Services (CMS) “under protest.”
Merck stated, “While we disagree with both the legal and policy grounds of the IRA’s new program, withdrawing all of our products from Medicare and Medicaid would have devastating consequences for the millions of Americans who rely on our innovative medicines. It is not feasible for any manufacturer to abandon nearly half of the U.S. prescription drug market.”
Similarly, Bristol Myers Squibb (BMS), which has two products on the Medicare list, stated that it had “no choice other than to sign the ‘agreement.'”
The company’s spokesperson explained, “If we did not sign, we would be required to pay impossibly high penalties unless we withdraw all of our medicines from Medicare and Medicaid. That is not a real choice.”
BMS and Merck have filed lawsuits against the Department of Health and Human Services (HHS) to halt the bargaining program, accusing the federal government of unconstitutional actions and exceeding its authority.
According to the rules of the Inflation Reduction Act, manufacturers who do not wish to participate in negotiations can withdraw all of their products from Medicare and Medicaid coverage, thereby losing a highly lucrative source of income.
The alternative is an excise tax on the selected product’s U.S. sales, starting at 65 percent and potentially reaching 95 percent. Lawsuits filed against the negotiations argue that no company could afford to pay such a tax. Drugmakers can avoid the penalty by providing at least 30 days’ notice before it takes effect, indicating their intention to terminate their relationships with Medicare and Medicaid.
During recent oral arguments between the Chamber of Commerce and the federal government, the administration’s attorneys argued that there is no compulsion for companies to keep their drugs covered under Medicare and Medicaid. They further asserted that the risk of financial harm resulting from terminating relationships with the CMS, while acknowledged, does not constitute coercive action.
The coming Sunday holds dual importance as the Chamber of Commerce, in its lawsuit, has requested a preliminary injunction on the Medicare Drug Price Negotiation Program, claiming that “irreparable harm” would result if the process continues.
U.S. District Judge Michael J. Newman has assured that he is working expeditiously to issue a decision on the matter. At the time of writing, no ruling has been made.
Other drugmakers whose products have been selected offered more conciliatory statements regarding their intent to engage with the CMS.
AstraZeneca expressed pride in the role its drug Farxiga plays in the lives of people in the U.S. living with Type 2 diabetes.
The company stated, “We remain committed to ensuring patients have access to FARXIGA and plan to participate in the process outlined by CMS to communicate the value of FARXIGA to people covered by Medicare.”
Boehringer Ingelheim, whose diabetes medication Jardiance was also selected, declared its commitment to open and transparent discussions with CMS.
The company added, “We look forward to sharing detailed information with CMS on the value of Jardiance and to reinforce the need to invest in scientific medical innovation for the patients we serve.”
Some companies were less certain about their intentions.
Novo Nordisk, the manufacturer of NovoLog, expressed support for policies that ensure patients can afford their medicines, including insulin. However, it criticized CMS for unilateral price setting without considering the impact on patients with chronic diseases or the healthcare system as a whole.
Novo Nordisk added, “We continue to explore all options that allow us to drive change for people who need it and strive to continue bringing innovative medicines to the market while increasing access for those who need them.”
Johnson & Johnson, Novartis, Immunex Corporation, and Pharmacyclics, whose products have also been named, did not immediately respond to requests for comment from The Hill.
Despite their public objections, experts have stated that drug manufacturers were always likely to participate in the process due to the ongoing possibility of their lawsuits failing.
Jack Hoadley, research professor emeritus at Georgetown University’s McCourt School of Public Policy, stated that he is not surprised that companies are moving forward with government negotiations despite their public objections.
Hoadley said, “I think the companies probably have a dual strategy of trying to stop the program through the courts while also starting the process in case they lose in court. The penalties for not participating are substantial, so they create a very strong incentive to participate.”
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