On August 15, 2024, the Centers for Medicare & Medicaid Services (CMS) announced the new “negotiated” prices for the first ten Medicare Part D drugs subject to price controls under the Inflation Reduction Act (IRA), which range from a 38% cut to a 79% cut from the 2023 list price—or wholesale acquisition cost (WAC)—for each drug. Two drugs on the CMS list, Enbrel and Stelara, are also being targeted by Colorado’s Prescription Drug Affordability Board (PDAB). 

CBSA continues to work directly with policymakers and collaborate with our state and national advocacy partners. We also 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. 

How CMS is Framing the Results 

CMS is framing the results of its negotiations as saving an estimated $6 billion, or approximately 22%, across the ten selected drugs, in terms of Medicare spending net of rebates, fees, and payments compared to 2023. CMS is asserting that people with Medicare prescription drug coverage are expected to see aggregated estimated savings of $1.5 billion in their personal out-of-pocket costs in 2026. However, there is significant debate about the accuracy of those numbers and the assumptions underlying them. As the headline of a STAT News article said, “What do Biden’s drug price comparisons reveal? Not much. White House price comparisons dramatically overstate what Medicare pays for prescription drugs.” 

This is how CMS’ infographic document presents the data: 

And this is how CMS’ fact sheet presents the data: 

Advocacy Groups Fight Back 

Industry, provider, and patient groups are concerned about the impacts of the IRA’s price controls and are continuing to fight back. The Biotechnology Innovation Organization (BIO), the world’s largest trade association representing biotechnology companies, academic institutions, state biotechnology centers, and related organizations, released the following statement after CMS’ MFP announcement: 

“While the Inflation Reduction Act puts a cap on senior’s out-of-pocket costs, it also contained some very damaging parts that will impede the development of newer and better medicines for all. Important aspects of the IRA are also damaging to the critical role of the United States and our allies to remain the centers of excellence in biotechnology worldwide. With today’s announcement, we see the start of unilateral government mandated price controls. This will inevitably lead the U.S. on a path to higher costs for patients and less access to innovative medicines.   

The lack of transparency and a scientific approach to decision-making throughout this process undermines the value that these medicines bring to patients in the U.S and around the globe. We are also just beginning to see the harm to patients caused by the unintended consequences of penalizing medicines made as pills. The IRA also includes a damaging provision that will curtail the development of medicines for multiple rare genetic diseases. 

At the same time, Congress and the administration must turn their full attention to health insurers and middlemen who profit by denying Medicare patients and others access to the medicines that their doctors prescribe. This is the source of high costs at the pharmacy and the denial of access to lifesaving treatments and cures. Delay and denial from health insurance companies equals suffering and death. This must be addressed, as well as correcting the most egregious parts of the IRA.” 

The Partnership to Fight Chronic Disease (PFCD), an internationally-recognized organization of patients, providers, community organizations, business and labor groups, and health policy experts committed to raising awareness of the number one cause of death, disability, and rising health care costs—chronic disease, released the following statement after CMS’ MFP announcement: 

“With the release of the prices for the first list of drugs selected under the Medicare Drug Price Negotiation Program of the IRA, significant market changes are expected not only for the selected drugs but also for their therapeutic alternatives. Advocates have voiced concerns to CMS about potential new access barriers Medicare beneficiaries might face with these medications. They have urged CMS to not only mandate coverage of these drugs but also to limit step therapy, unfavorable formulary placements, and other access hurdles. However, CMS has declined to enforce such protections. 

Many of the drugs on this initial list are used to treat common chronic conditions such as type 2 diabetes, kidney disease, and heart disease. The expected access barriers for Part D beneficiaries are likely to disproportionately affect individuals with these conditions, particularly those with multiple chronic illnesses. Given existing health disparities, underserved populations could experience the greatest negative impact. This will also limit the extent of estimated savings to both the Medicare program and to beneficiaries themselves. 

Consequently, it is highly unlikely that Medicare beneficiaries who depend on these medicines will realize anywhere close to the level of projected savings in out-of-pocket costs that the Administration touted this morning. Savings, wherever they may be ultimately found, must not come at the risk of patient access to medicines that allow them to live longer, healthier lives.  Efforts to pass along rebates directly to patients at the pharmacy counter and delink Pharmacy Benefit Manager (PBM) compensation from the list prices of medicines would directly cut costs of medicines for people covered by Medicare and other insurance in a way that IRA price-setting simply cannot.” 

PDAB Impact 

Colorado’s Prescription Drug Affordability Board (PDAB) is moving forward with an upper payment limit (UPL) rulemaking process for two of the drugs given “maximum fair prices” (MFPs) under the IRA: Amgen’s Enbrel, whose MFP is 67% less than the 2023 WAC, and Janssen Biotech’s Stelara, whose MFP is 66% less than the 2023 WAC. As explained by Inside Health Policy, “Colorado’s UPL process allows the PDAB to consider the CMS prices in determining a UPL if the board chooses to, along with other factors like wholesale acquisition cost, average sales price and out-of-pocket cost.” 

In addition, 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. 

CBSA’s Advocacy 

CBSA and our national partners lobbied against provisions in the IRA that allow the federal government to “negotiate” prescription drug prices for Medicare. 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. 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. In fact, BIO cites research showing 78% of manufacturers are planning to cancel early-stage projects, which “no longer make sense given the short timelines before medicines could be subject to government price setting.” 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. 

When discussing the IRA previously, Amy Goodman, CBSA Vice President and Counsel for Policy + Advocacy, has said: 

“Colorado BioScience Association’s members develop and manufacture health innovations that save and improve patients’ lives…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.” 

During CBSA’s recent visit to Capitol Hill, CBSA emphasized that CBSA members continue to have significant concerns about the impact of the IRA on investments in innovation, but there are two bills that could mitigate the negative impact of the IRA on patients and innovation: 

• First, the Optimizing Research Progress Hope and New (ORPHAN) Cures Act (H.R.5539/S.3131) would help to protect the incentives necessary for drug manufacturers to research and develop treatments for rare diseases by amending the IRA to ensure orphan drugs treating one or more rare diseases or conditions are excluded from Medicare price negotiations. By passing this legislation, Congress can encourage follow-on investment into orphan drug development and preserve hope for millions of Americans living with a rare disease or condition. 

• Second, the Ensuring Pathways to Innovative Cures (EPIC) Act (H.R.7174), would fix the small molecule “pill penalty,” ensuring protections from price controls for small molecules are increased to the same as those for large molecules. A compelling op-ed in Real Clear Health discusses the importance of this legislative fix. 

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 for opportunities to make your voice heard.