Inflation rebates incoming: Wyden calls on CMS to move quickly as Novartis CEO pledges reversal

03 Feb 2023
endpts.com
Senate Finance Chair Ron Wyden (D-OR) this week sent a letter to the head of the Centers for Medicare & Medicaid Services seeking an update on how and when new inflation-linked rebates will take effect for drugs that see major price spikes. The newly signed Inflation Reduction Act requires manufacturers to pay a rebate to Medicare when they increase drug prices faster than the rate of inflation. According to the text of the law, Medicare should have already begun penalizing manufacturers for price increases that outpace inflation starting in October 2022 for Part D drugs, and last month for Part B drugs administered by providers. But Wyden asks CMS Administrator Chiquita Brooks-LaSure in his letter released yesterday when these provisions will take effect, how the rebates will be calculated, and how manufacturers will be penalized. The annual inflation rate for the United States is currently about 6.5% for the 12 months ended December 2022, but a new rate is coming from the Labor Department on Valentine’s Day. Drugs that could face these rebates include Novartis’ cancer drug Afinitor, which saw a 9.9% price increase on Jan. 4; Pfizer’s Bicillin shot to treat bacterial infections, which saw its price rise 10% on Jan. 1; or Acorda Therapeutics’ multiple sclerosis drug Ampyra, which saw its price rise 10% on Jan. 1, according to the data firm 46brooklyn . Former FDA Commissioner Mark McClellan co-authored an article recently in Health Affairs , warning that pharma manufacturers “will be more likely to continue to take substantial list price increases (potentially with larger rebate growth) in commercial markets for drugs that have little Medicare utilization, as their Medicare inflation penalties will be relatively small.” The Congressional Budget Office estimated that inflation rebate provisions will save Medicare $63 billion over ten years. “It is my strong hope that manufacturers that increase prices above inflation will be penalized promptly,” Wyden writes. “What steps is CMS taking to help ensure invoices will go out on a timely basis?” Meanwhile, Novartis CEO Vas Narasimhan, the incoming chairman of the board for top lobbying group PhRMA, pledged to legislatively reverse the dichotomy created by the IRA that sets up Medicare negotiations after nine years for small molecule drugs and 13 years for large molecule biologics. He made clear on this week’s earnings call that legislative action is coming: He said two other areas of major focus will be on PBM reform, which the FTC is investigating and is a bipartisan topic that the Senate Judiciary Committee has sought to take up, and ways to improve the 340B program. That program has ballooned in recent years, and Narasimhan said he wants it to “actually deliver on its intended purpose for patients in low income settings and who benefit from various programs from federally qualified healthcare clinics.” Several pharma companies recently defeated HHS in a court case related to the 340B program.
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