On August 29, 2023, the Centers for Medicare and Medicaid Services (CMS) announced the first ten prescription drugs that will be subject to price controls in Medicare under the Inflation Reduction Act (IRA): Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and various forms of insulin. Two of those drugs, Enbrel and Stelara, were also among the five drugs selected by the Colorado Prescription Drug Affordability Board (PDAB) for affordability review and potential imposition of an upper payment limit (UPL). 

CBSA continues to work directly with policymakers, collaborate with our state and national advocacy partners, and use our voice and communications platforms to emphasize our concerns about the unintended consequences of the flawed policies and implementation of government price controls on prescription drugs. Most recently, CBSA signed on to a letter from We Work for Health to the Colorado Congressional Delegation. 

What the IRA Does 

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA), a sweeping bill aimed at addressing high inflationary costs, into law. CBSA and our national partners lobbied against provisions in the law that allow the federal government to “negotiate” prescription drug prices for Medicare. 

However, as Bristol Myers Squibb CEO Giovanni Caforio explained in the Wall Street Journal, “Contrary to how it has been framed, the Inflation Reduction Act’s drug-pricing program doesn’t involve negotiation in any ordinary sense of the word…[It] essentially lets the government set any price it chooses. Making matters worse, the Inflation Reduction Act will force drug makers to ‘agree’ that the dictated price is the ‘maximum fair price,’ no matter how unfair the price may be.” 

The Editorial Board at the Wall Street Journal didn’t mince words when it said, “The Inflation Reduction Act (IRA) is the worst legislation to pass Congress in many years, and its drug price controls are especially harmful…President Biden…[is] exaggerating the benefits while ignoring the larger damage.” 

Impact on Access and Innovation 

While we share the goal of reducing prescription drug costs for patients, we worry government price controls on prescription drugs will lead to reduced patient access while also threatening jobs and future innovation. There are concerns that much of the “savings” resulting from the IRA will not go toward strengthening the Medicare program at all, but instead will be used to fund non-healthcare-related endeavors. And, in practice, the IRA’s government price setting will chill investment in next-generation treatments and cures for patients in need. 

Research shows government-mandated drug pricing provisions will hinder the development of future therapies dependent on reinvesting returns. Some companies have already pulled drugs from clinical trials because price controls will limit their economic viability. There are early signs that hundreds of would-be research and development opportunities will never come to fruition because of the IRA’s overstep. In addition, domestic drug competition and generic drug development are also set to decline.  

In short, life-saving innovations and the jobs that create them are at risk. According to a Vital  Transformation study, the IRA could lead to an elimination of as many as 1.1 million jobs throughout the biopharmaceutical industry, including an estimated 7,665 jobs impacted here in Colorado between 2026 and 2035, and a major decrease in U.S. competitiveness in the global ecosystem. The IRA compounds the threat posed by the Colorado PDAB to breakthroughs for patients and Colorado’s momentum as a world-class health innovation ecosystem. The anticipated annual impact of the IRA alone is  $953M – $1.88B in losses of biopharmaceutical-supported output in Colorado from 2026 to 2035. 

Drugs Selected by the Colorado PDAB and CMS 

The first ten prescription drugs that will be subject to price controls in Medicare under the IRA are: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and various forms of insulin. As mentioned earlier, two of those drugs, Enbrel and Stelara, were also among the five drugs selected by the Colorado PDAB for affordability review and potential imposition of a UPL. 

Four of the companies directly impacted by CMS’ and the Colorado PDAB’s first drug selections have a physical presence in Colorado, but the ripple effects of the IRA and the PDAB will go much further. Within the Colorado life sciences ecosystem alone, there are more than 24 early-stage biotech companies developing therapies for the clinical indications targeted by the impacted drugs, which include: cancer, autoimmune diseases, psoriasis and psoriatic arthritis, blood clotting, diabetes, heart failure, HIV, and cystic fibrosis. 

Statements from CBSA and Our National Partners 

Amy Goodman, CBSA Vice President and Counsel for Policy + Advocacy, has made the following statement: 

“Colorado BioScience Association’s members develop and manufacture health innovations that save and improve patients’ lives. Despite important questions about the data and methodology used by the Colorado Prescription Drug Affordability Board (PDAB), as well as vocal opposition from rare disease patients, the PDAB moved ahead with selecting drugs for affordability reviews which could result in the setting of upper payment limits. Similarly, the Centers for Medicare and Medicaid Services (CMS) has selected the first ten drugs on which it will impose price controls under the Inflation Reduction Act (IRA) despite concerns from patients and members of the supply chain about the approach and process. These decisions could have serious unintended consequences on patient access to medicines, on healthcare providers purchasing medicines, and on the market for innovative biopharmaceutical products.” 

Our national partners have also released statements following CMS’ drug selection announcement: 

“The Medicare price control provisions of the IRA are already significantly, and negatively, impacting the research and investment decisions of the biotech industry in the US.  As we have said many times before, the IRA impacts not just the drugs targeted on today’s list, but the entirety of the biotech ecosystem that must make research and funding decisions many years in advance of ever hoping to bring a product to patients.  BIO and our members will continue our efforts to thwart the overtly negative impact the IRA’s price control provisions will have on patient access, innovation, and economic development more broadly.” 

–Rachel King, BIO interim President and CEO 

“Today’s announcement is the result of a rushed process focused on short-term political gain rather than what is best for patients. Many of the medicines selected for price setting already have significant rebates and discounts due to the robust private market negotiation that occurs in the Part D program today. Giving a single government agency the power to arbitrarily set the price of medicines with little accountability, oversight or input from patients and their doctors will have significant negative consequences long after this administration is gone. And insurance companies and their PBMs may further restrict access to medicines through increased utilization management, higher copays and more restrictive formularies.  

Politics should not dictate which treatments and cures are worth developing and who should get access to them. The cancer moonshot will not succeed if this administration continues to dismantle the innovation rocket we need to get there. The harm will spread beyond cancer and impact people with rare diseases, mental health illnesses and other terrible diseases.  

American patients deserve better. We will continue to fight for solutions that lower costs for patients at the pharmacy counter, address abusive practices by insurers and PBMs and mitigate the harm this law may have for future generations.” 

– Stephen J. Ubl, President and CEO, Pharmaceutical Research and Manufacturers of America (PhRMA)  

Next Steps Under the IRA 

Following CMS’ announcement of the ten drugs covered under Medicare Part D selected for the first cycle of negotiations, the next steps in the implementation of the Medicare Drug Price Negotiation Program are: 

• October 1, 2023: Deadline for companies of drugs selected for the Negotiation Program to sign agreements to participate in the negotiation process for 2026.  
• October 2, 2023: Deadline for companies of drugs selected for the Negotiation Program to submit manufacturer-specific data to CMS to consider in the negotiation of maximum fair price.  
• February 1, 2024: CMS sends initial offers of a maximum fair price with a justification for a selected drug to each company participating in the Negotiation Program. The negotiation period begins.  
• March 2, 2024: Companies have 30 days from receiving offers of a maximum fair price for a drug to accept the offer or propose a counteroffer, if desired.  
• August 1, 2024: The negotiation period ends.  
• September 1, 2024: CMS will publish maximum fair prices for drugs selected for negotiation for 2026.  
• January 1, 2026: Maximum fair prices are effective for selected drugs. 

CMS’ new fact sheet says, “During the Fall 2023, CMS will invite each participating drug company with a selected drug to engage in a meeting on its data submission. CMS will also hold a public patient-focused listening session for each selected drug with patients and other interested parties. The patient-focused listening sessions will be held between October 30, 2023 and November 15, 2023. The listening sessions are subject to change, including postponement and/or cancellation.” 

CBSA’s Ongoing Advocacy 

As the implementation of both the IRA and the Colorado PDAB move forward, CBSA will continue to work directly with policymakers, collaborate with our state and national advocacy partners, and use our voice and communications platforms to emphasize our concerns about the unintended consequences of the flawed policies and implementation of government price controls on prescription drugs. Please reach out to Amy Goodman, CBSA Vice President and Counsel for Policy + Advocacy, for opportunities to make your voice heard.