No Big-Picture Impact for Manufacturers in CMS IRA Updates

In the face of multiple lawsuits and 7,500 public comments, CMS adjusted some aspects of the Inflation Reduction Act’s drug price negotiation provisions, but the changes don’t lessen the law’s overall power to require pharmaceutical companies to sell medications to the government at what they fear will reflect below-market rates.

The revisions, for example, make it easier for companies to leave the Medicare system if they don’t want to play ball, but they don’t weaken the program’s formidable financial stick, which whacks noncompliant companies with an annual excise tax of up to 95 percent of sales, and fines of up to $1 million for every noncompliant day.

And leaving the IRA negotiation process also means “terminating all of its applicable agreements under the Medicare and Medicaid programs,” according to the CMS memorandum accompanying the revised guidance.

The revisions amount to placatory “box-checking” while ignoring government overreach that verges on unconstitutionality, according to the Pharmaceutical Research and Manufacturers of America (PhRMA). In June, the group filed its own court complaint, adding to the growing list of legal challenges facing the program.

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