Richard H. Hughes, IV, Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Washington, DC, office, co-authored an article in Health Affairs, titled “The IRA: Reducing Inflation or Threatening Patient Access?”

Following is an excerpt:

The Biden administration touts the Inflation Reduction Act (IRA) as lowering prescription drug costs and many of its supporters view having Medicare “negotiate” drug prices as emulating policies in Europe. The IRA does lower Medicare beneficiaries’ costs by capping their out-of-pocket spending on retail drugs in the Part D program; however, the IRA’s Medicare Drug Price Negotiation (MDPN) program is far more coercive than any European country system and unnecessarily threatens access to medicines for millions of Medicare and Medicaid beneficiaries.

Rather than a “negotiation,” the IRA’s MDPN program creates a government price-setting scheme under which the Centers for Medicare and Medicaid (CMS) will inform biopharmaceutical manufacturers of Medicare’s Maximum Fair Price (MFP). Should a company choose not to participate in the MFP-setting process, it will be forced to either pay an excise tax that could conceivably exceed its entire company revenue or remove all of its products from the Medicare program and all state Medicaid programs. The prospect of such a dire scenario is not inconceivable as CMS recently rejected counteroffers from all companies whose drugs were selected for the first round of “negotiations.”

Collectively, the nine biopharmaceutical companies that are primary manufacturers of the drugs selected for the first round of the program produce medicines for 28 million patients in Medicare and Medicaid each year (See exhibit 1). In 2021, eight million Medicare and Medicaid patients received one of the ten drugs selected and another 20 million were treated with other products made by the nine biopharmaceutical manufacturers. By government policy design, the vast majority of Medicare and Medicaid enrollees do not have additional health insurance that would pay for these medicines if Medicare and Medicaid did not.

Jump to Page

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.