Vacation is Over!

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It’s the end of August and there are definite indications that vacation time is coming to an end. There are some well documented rumors that the Centers for Medicare and Medicaid Services (CMS) will release the first list of the 10 drugs selected under the new Inflation Reduction Act (IRA) before the stock market opens tomorrow morning. These first 10 drugs will be selected from costly drugs that have no generic or biosimilar competition. The purpose of the so called “negotiations” will be to arrive at a maximum fair price (MFP) for each drug. As I have done in earlier blogs, I put the term “negotiations” in quotes since the term is misused. When I use the term negotiations, it identifies two parties that each have some degree of leverage and use that leverage to have a back-and-forth discussion until an agreeable solution is reached or one of the parties pulls out of the negotiations because the final terms of the proposed solution are unacceptable. This isn’t how the IRA negotiations will work.

Under the IRA, the government can present a price to which the manufacturer can then counter with another price. The government can then refuse the counteroffer and publish their final MFP. If the manufacturer disagrees with the published MFP for the drug and pulls out of the negotiations, the manufacturer is banned from selling any of its drugs to the Federal government’s programs (i.e., Medicare and Medicaid), or face a tremendous fine. Either option would be financial suicide for the manufacturer. One of the big problems with this scheme is that the IRA stipulates that “[t]here shall be no administrative or judicial review” of the negotiations or their outcome. So, the government can set the price without fear of any review as to the legality of their actions, and the manufacturer has no recourse but to comply with the MFP the government set.

To many, this whole “negotiation” process seemed to infringe on the rights of the manufacturers and the law has been besieged with numerous legal challenges. These pending cases were brought by six manufacturers and two organizations, the manufacturer’s association, PhRMA, and the U. S. Chamber of Commerce. While you would expect the manufacturers, who would be financially affected by the price fixing and their association, to bring legal challenges, it is interesting that the U.S. Chamber of Commerce would weigh in. The Chamber states that, “the new provisions in the Inflation Reduction Act (IRA) violate fundamental protections for free enterprise enshrined in our Constitution, which would have far-reaching implications in the future”. This stance by the Chamber carries a lot of weight with me. I’ll have more to say about this below.

The second thing that indicates that vacation time is over is the return of Congress to Washington from their summer recess. To borrow a quote from Punchbowl News: “The rest of 2023 will be extremely hectic and high-wire for Congress and Washington.”  Suffice it to say that some of this hectic and high-wire action will involve our healthcare. There is already a lot of focus on next year’s election and the legal battles of former President Trump. The most immediate concern of Congress is the passage of a spending bill by the September 30th deadline. What concerns me is the situation where late in the negotiations a deal is struck where an amendment impacting healthcare access and quality is used to garner votes to pass the spending bill. I’ve seen this happen and these types of deals almost always turn out to be bad for seniors. For instance, I’ve talked before about the SMART Act, a piece of legislation that doubles down on the IRA price fixing scheme by increasing the number of drugs singled out for price fixing each year. While a continuing resolution may extend the deadline to pass a spending bill to the end of the year that will do little to lesson the chance for deals to be struck and the SMART Act is just the type of incentive offered to reluctant lawmakers to garner votes.

Another new wrinkle is the announcement that House Budget Committee Chairman Jodey Arrington (R-TX) and Budget Committee Member Rep. Michael C. Burgess, M.D. (R-TX) have launched a new Budget Committee Health Care Task Force. The task force will be expected to, “Find solutions to reduce health care spending, examine opportunities to modernize and personalize the health care system, and support policies to fuel innovation and increase patient access to quality and affordable care”. These committees can be really good or really bad so it will be important to pay attention to their actions. My own Representative from the 1st District in Utah, Blake Moore, has been selected to serve on the committee. I will ask him about what he thinks this committee will do, if and when I get to meet with him. There is a lot going on this fall and it is sure to affect us all.

I do want to talk a little about the lawsuits that have been filed. It bothers me that Congress has decided to pass legislation that ventures into the legal gray areas. The legal challenges deal with possible infringements of the First, Fifth and Eighth Amendments of the Constitution. Is this the direction we want our country to go? Do we want our lawmakers passing laws that have a chance to be challenged on the basis of our constitutional rights? It seems that Congress is willing to sacrifice our rights for political expediency. I worry about the precedent this law sets, about the power it gives our government.

The next few months are going to be busy; I’ll work hard to keep you up to date.

Update – The schedular from the Washington office of my Representative got back to me and said she was working through “some staggered out of office schedules” to satisfy my meeting request, that was four days ago. I’m going to call again tomorrow.

Best, Thair

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